Option backdating and board interlocks Free chat to lonley wives mobile number in uk
Our analysis provides new insight into how boards function and the role that they play in providing managerial oversight and determining corporate strategy., we examine the role of board connections in explaining how the controversial practice of backdating employee stock options spread to a large number of firms across a wide range of industries.The alternative is to gamble that the company is in the fifty percent of companies that did not backdate any option grants.In view of the high stakes and the impact of being wrong, that would be a bad gamble. and Whitby, Ryan J., “Option Backdating and Board Interlocks” (November 2006). A discussion of the report is contained in the New York Times, January 21, 2007 at BU-5.
We focus on the role that director interlocks played in contributing to the spread of backdating since the board of directors has primary authority over the level and structure of executive compensation, including determination of the amount and timing of option grants.
This conclusion would clearly make the practice much more wide-spread than anyone had initially thought.
The study also suggests that the practice may have proliferated as a result of directors who held positions on more than one board.
Overlapping board memberships may have facilitated the transmission of the practice from one company to another through the small and exclusive club of corporate directors.
This suggestion is also contrary to the current wisdom that the practice was management driven – at least that is the inference from the two cases the SEC and DOJ have filed.
This finding also undermines the theory that outside directors will serve as a watchdog on improper management practices.