Companies have long offered stock options to their top company executives. Many times this gives the executive a “great deal” when the company’s stock price rises and the company gains revenue. However, some companies have falsified the issue dates of stock.

Stock options were created so that the owner can have the right to purchase the stock at a certain price, as long as; it is completed before a certain date. If the stock increases in value then the stock option increases in value. It is the same if the stock decreases in value, however; in that case the stock option basically becomes worthless. Stock options are normally granted at the current market price of the stock at that time and usually last for ten years.

Unfortunately, some company executives have falsified the date that the stock option was issued to them in order to receive more money. One recent example of was in 2006 when Apple executives were accused of falsifying their own stock options. This caused Apple’s stock to fall six percent and Apple executives found that “Apple had previously disclosed that “stock option grants made on 15 dates between 1997 and 2002 appear to have grant dates that precede the approval of those grants.” By changing the date of an options grant, an executive who receives the grant can obtain even greater savings when buying the stock in the future. (http://money.cnn.com/2006/12/27/technology/apple_options/index.htm)”.

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“The Falsification of any documents puts Apple at risk for potential criminal prosecution. Federal investigators are looking into allegations about illegal backdating of options at 100-plus companies, and some of them will likely be pursued solely as civil SEC inquiries, while others may face criminal charges. (http://money.cnn.com/2006/12/27/technology/apple_options/index.htm)”

Not only would the falsification of documents put Apple at risk of criminal charges but it would also affect the company’s reputation, which could have dire consequences just looking at the drop in stock shares from the accusation.

As you can see companies have offered stock options to their company executives, and there have been cases, like the one above, that these executives have abused the benefit that has been given to them. The end result of this act in criminal charges for the company as well as the executives behind it, mistrust in the company from then on out and even possible closure. All of these issues resulted from one hunger-greed.

Reference

http://www.hr-guide.com/data/G445.htm viewed June 21, 2008

Apple sinks then recovers after report Web site says options documents may have been falsified by company officials; Jobs hires own lawyer.

http://money.cnn.com/2006/12/27/technology/apple_options/index.htm December 27,2006 viewed June 21, 2008