(In 2004, FAS 123 was revised to require that all stock-option grants be expensed.) Brocade’s crime, charges the Do J, is that between 20, company executives “routinely backdated stock option grants to give employees favorably priced options without recording necessary compensation expenses.” Ultimately, the alleged criminal fraud is a disclosure and accounting issue that violates Section 10 (Manipulative and Deceptive Devices) of the Securities Exchange Act of 1934.
The Do J claims that by not properly accounting for the options expenses, the company’s financial condition was misrepresented to investors. Tax Code, a company can take up to a $1 million deduction for performance-based compensation awarded to “covered” executives.
Indeed, if the practice was properly documented and disclosed in the financial statements, and given the appropriate tax treatment, there is an argument to be made that no law was violated, contends Lee.
Just click "Set custom time" from the Compose view.
For example, the IRS disallows certain corporate tax deductions for in-the-money options, but it allows them for performance-based pay.
Furthermore, since 1995, when FASB issued FAS 123, Accounting for Stock-Based Compensation, companies have been required to record in-the-money grants as a compensation expense.
Our researchers have concluded that allowing each person more than ten pre-dated emails per year would cause people to lose faith in the accuracy of time, thus rendering the feature useless.
Their findings: "I just got two tickets to Radiohead by being the 'first' to respond to a co-worker's 'first-come, first-serve' email.
The cascading litany of alleged charges is not likely to stop with the Brocade case.
Indeed, with more than 80 companies being reviewed by the SEC for potential illegal backdating practices, and one academic study claiming that more than 2,000 companies have engaged in the practice, civil and criminal charges will probably mushroom in the next few months. The purpose of backdating is straightforward: it gives options holders an immediate paper gain, and a real gain once the option is exercised.