Backdating stock options definition
The board formally grants the stock options to Jane every year at its January board meeting.This is important because the grant date is what determines the exercise price on the options.The general reason companies backdate options is to create a lower exercise price, which in turn increases the probability that exercising the options will make more money for the optionee.
This makes the options in-the-money for the grantee (Jane Smith, in our example), basically giving her options that are instantly profitable.
Is Option or Employee stock option the better link?
Mr Stephen , 24 July 2006 (UTC) The external links: "Background on the Options Backdating Scandal, ISS, retrieved 2006-07-24." "CNBC's Closing Bell interview with CFRA's Marc Siegel May 19, 2006, retrieved 2006-12-27" "Ex-Comverse lawyer settles with SEC for million, retrieved 2007-01-10" are broken.
It's also questionable whether the sentence is grammatically correct.
It seems to me: Options backdating is the corporate practice of granting an option in the present but reporting that it was issued "at the money" at a prior date when the stock price was lower.