The legal fallout from the stock-option backdating scandal that surfaced in 2006 is over, and the price tag was high, according to an analysis by Audit Analytics.
A total of 181 lawsuits alleged that executives were overpaid through improperly timed stock-option awards at companies, including United Health Group and Broadcom A settlement in the final suit, involving fiber-optics supplier Finisar, was approved last month.
Backdating of stock options is an example of an agency problem.
It has emerged despite all the measures (i.e., new regulations and additional corporate governance mechanisms) aimed at addressing such problems?
That exercise price, or strike price, usually takes one of three forms: the closing price on the day of the grant; an average of the highs and lows of the day; or the closing price from the previous day.