Is backdating stock options ethical Nude webchat roulette

As a manager of any firm, the most important goal is to maximize returns to shareholders through growth and profit producing activities.Stock option grants are meant to align the incentives of executives with those of the shareholders.

This form of performance-based compensation became increasingly favoured over conventional salary compensation during the 1990's.

One reason was the boom of the technology industry, which used stock options to lure talented managers to their start-up firms.

Lacking the on-hand capital to pay large salaries to executives, stock options were offered instead.

Executives backdating stock option grants led to a loss of approximately $500 million per firm in returns to investors from 1995 to 2002.

With over a 100 companies being investigated for backdating, an ethical dilemma arises concerning the practice itself.

The ethics of backdating are examined using a contract-based ethical framework, and the breakdown of ethics by the overwhelming number of participants is examined using moral disengagement.

Through this analysis, the backdating of options is shown to be unethical, leading to the question of what should be done about it.

Recommendations are presented addressing the major weaknesses in backdating prevention.

Through an acceptance of the unethical nature of backdating, and implementation of the forthcoming recommendations, investor confidence can be regained to rebuild the efficiency of the current investor environment.

Stock option grants, and other forms of performance-based compensation, are a means of avoiding agency problems by tying executive compensation to company performance.

Agency problems are defined as managers not acting in the best interest of shareholders.

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