Call it the six degrees of separation theory of corporate governance. A study has found that study has found that the probability that a company would start backdating stock options study rose by up a half if 0ne 0f its directors was also on the board of a company already backdating options.
A Christmas present from the SEC to America’s CEO’s. On the Friday before Christmas, the SEC has sneaked in a new rule changing the way stock option packages are calculated. The new rule reduce how much information shareholders would get on how much companies are actually paying their executives.
Why all the fuss about the expensing of options? Nothing to do with accounting or the health of companies. Bosses and directors don’t want the general public to understand the ever increasing gap between the wages of the average American worker and the average corporate CEO.
So you think backdating stock options is legit? Check a new study which has found that hundreds of US company bosses inflated their pay by as much as 10 per cent by secretly backdating share options. The study estimates that 12 per cent of firms used manipulation to provide “lucky grants” of options at the lowest price of the month.
The Securities and Exchange Commission is now examining whether directors who sit on more than one company board may have spread the practice of backdating stock-option grants with research showing that 40 per cent of the companies under scrutiny have common directors. This is all part of the “six degrees of separation” theory of corporate governance.
Apple was held up last week as a model of crisis management but questions are continuing about those options. Is it time for Steve Jobs to give $85 million or so back to shareholders after he benefitted from a switcheroo perpetrated by the Apple board?
Apple & Hewlett-Packard. Two significant developments, two significant companies. And initially, it looks like a study in contrasts. HP’s chairwoman Patrica Dunn and others are now facing criminal charges, and CEO Mark Hurd isn’t off the hook either. Apple boss Steve Job has apologised to shareholders and investors about the backdated options. But his attempts to clear the decks raise more questions than answers.
