The Scottsdale, Arizona-based firm’s list examines companies where executive exercises at “look-back lows” occurred more than once, or where one well-timed exercise involved less than 10,000 options/shares, according to a news release.
“A select set of executives at numerous US
companies appear at risk of losing their jobs and/or
having underpaid taxes if exercise backdating is shown
to have occurred at these firms,” said Carr Bettis,
chief scientist for Gradient, in the news
release. “In many cases, the practice creates
wealth for executives while at the same time costing
the company valuable deductions, to the detriment of
Exercise backdating occurs when a company executive (with a complicit corporate executive or stock plan administrator) waits until it is time to report their trades for a month to identify the lowest price of the month to exercise their stock options; lowering their own taxes and potentially lowering the company’s tax deduction at the same time, Gradient said.
Several companies have ousted chief executives and have restated their earnings amid the options backdating allegations (See Corporate Carnage Continues in Stock Options Scandal with Monster Firing ). The most recent executive under fire for backdating is Apple Inc.’s Steve Jobs (See Apple CEO Aware of Some Stock Option Grants ).