Backdating option scandal

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While lucky early employees might get actual shares, most workers will depend on stock options to cash in on the tech boom.

A stock option granted, for example, on the day you join the company allows you the right to buy that share at that day's price, but not until a fixed period – say a year – has elapsed.

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OPINION: The former CEO of a US tech giant will have 21 long months in which to rue the day he ever heard of stock option backdating.

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One explanation was that options were being backdated to before major rises.It is simply not an option for publicly listed companies to pretend that an option was granted days or even weeks ago.Publicly traded companies must disclose any grants of options to directors as soon as possible.That idea broke from academia into the business mainstream in 2006, and backdating scandals swept like wildfire in 2006, involving companies as famous as Apple, Dell and Broadcom.Reyes is the first executive to go on trial, though others have settled cases with US financial regulator the Securities and Exchange Commission and paid not only fines, but millions of dollars of 'ill gotten gains' in some cases. The simple answer is that the practice has not taken hold because of the quality of UK regulation.Backdating is the practice of rewriting the agreement so that the option appears to have been granted at an earlier time when the share was even cheaper.

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