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These companies met their demands, and were allowed to do so by shareholders who were far too distracted in their quest to find tech companies with the best growth prospects.
By the market bottom in 2002-2003, scores of tech companies were left with unhappy employees holding worthless options with triple-digit exercise prices.
Lillard, the former member of Stryker’s stock option committee. 11 and say, ‘Gee, how can we take advantage of this? Brown said that for the past 10-12 years, the company, to compensate for a relatively small number of options given to executives, has tried to ‘pick what we think would be the low point of the year.
That’s what we’re gunning for.’“Stryker’s option grant came on the lowest closing stock price for the second half of the calendar year. Brown said he believes that he called both members of the stock option committee on Sept.
17, 2001, through the end of the month, 511 top executives at 186 of these companies got stock option grants. They were worth about 5 million when granted, based on a standard method of valuing stock options.“At Stryker Corp., a Michigan maker of orthopedic products, onetime stock option committee member John Lillard said he didn’t regret the decision to award options nine days after the attack. 20, 2001, at the bottom of a sharp ‘V’ pattern in the share price.“Mr.
A review of Standard & Poor’s Execu Comp data for 1,800 leading companies indicates that from Sept.
But abuse of stock options has been allowed to perpetuate for years.
In all my reading of the backdating scandal coverage, I have yet to see a thorough analysis of the real victims of this scandal: shareholders.
Backdating is perpetrated by “cherry-picking,” after the fact, the lowest points the company stock traded throughout the previous year when calculating the exercise price of option grants.
The exercise price of an option is crucial because it is the price the executive or employee option holder must pay to the company when exercising options in return for newly issued shares.
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But first, on the same page of the July 15 Wall Street Journal is another article quoting an early whistle-blower in the backdating scandal.