Why Is Backdating Stock Options Wrong?

Thus, backdating can be misleading to shareholders in the sense that it results in option grants that are more favorable than the shareholders approved in adopting the stock option plan.

Why is backdating options illegal?

Backdating only becomes illegal when executives fail to disclose the practice in financial reports, and fail to properly account for backdated options according to Generally Accepted Accounting Principles (GAAP) and the relevant tax laws.

Is backdating stock options illegal?

Backdating options has been considered to be an unethical or illegal practice, and is now subject to legal and regulatory enforcement since the Sarbanes-Oxley Act of 2002.