Monday, March 20, 2006

Back Dating Options

Truth on the Market is quickly becoming one of my favorite blogs. Billed as a blog providing "Academic commentary on law, business, economics and more" the blog is the work of a self-described "group of young law professors."

The blog is interesting because those of us who practice law look at issues differently from law professors. We are looking for the practical implications, they are looking at the theoretical. But the two are not mutually exclusive, and often the academics can provide useful insights into the legal issues that practitioners might not have the time or inclination to delve into.

Professor Manne's post I look pretty young but IÂ?m just backdated, yeah on the apparent practice of backdating options grants to corporate officers is a recent example. The practice might not actually be backdating, but it certainly appears questionable when corporate officers are granted options that just happen to be priced at the recent low of the stock's price. Professor Manne provides an analysis that provides an different view than the reaction that a securities law practitioner might have of the practice.
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