Stock options backdating and representing law firms

I recall reading somewhere that the board is supposed to represent shareholders’ interests, not the CEO’s!

Lie estimates that 29% of the nearly 8,000 firms studied had backdated or otherwise manipulated grants to top executives at some point between 1996-2005.“The paper, authored by Dr.This fact is often used as a reason to downplay the seriousness of the issue.You’d think that shareholders wouldn’t tolerate the use of accounting sleight of hand to compensate executives while bypassing the traditional “selling, general, and administrative” line in the income statement.Simply put, backdating a stock option grant amounts to ripping off shareholders by shortchanging the company treasury.Shares are issued to option holders at artificially low prices and the company gets an artificially low amount of capital in return for its shares.

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