Backdating stock options definition
In our example, backdating the options is the same as giving John Doe a check for ,000 -- without recording that ,000 on the within two business days.In addition to being illegal, backdating isn't always a sure thing.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.If, however, Company XYZ decides to backdate the options, then it could change the paperwork to state that it actually granted those stock options to Jane on, say, June 15, 2019, when the stock was only trading at per share.This would mean that Jane's 2020 stock option grant would have an exercise price of per share instead of per share.idfubar (talk) , 14 December 2009 (UTC) "Options backdating is the practice of issuing options contracts on a later date than which the options have listed." This does not seem to clearly define backdating.I have a decent understanding of financial options, and I cannot figure out what it means from this sentence.
That is, she has the right, but not the obligation, to purchase 1,000 shares of Company XYZ stock for per share.
But backdating options allows companies to set an exercise price that's lower than the current value of the company's stock.
This makes the options in-the-money for the grantee (Jane Smith, in our example), basically giving her options that are instantly profitable.
This is important to note, because the grant date is what determines the exercise price on the options.
For instance, if the board meeting is on January 3, 2012, and Company XYZ stock closes at per share that day, then the exercise price of John's 2012 stock are backdated, then his exercise price is only per share.