Companies caught backdating
The first step in untangling the causes of backdating is to acknowledge that the backdating phenomenon must be driven by both supply and demand factors. Lipman, Incentive Stock Options and the Alternative Minimum Tax: The Worst of Time, 39 Harv. Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, Pub.
From the supply side, the question is what motivates a firm to grant a backdated option, and from the demand side, what motivates an executive to demand (or, at the very least, accept) a backdated option?
But while the observation that plaintiffs’ lawyers are preferring shareholders’ derivative lawsuits appears to be valid, this observation does not explain plaintiffs’ lawyers are so eager to file derivative lawsuits.
Traditionally, derivative lawsuits have not been nearly as lucrative for plaintiffs’ lawyers as securities fraud suits.
He needs to restore the bank's reputation after revelations that staff opened as many as two million accounts without customers' knowledge to meet internal sales goals and he has to navigate a litany of federal and state investigations arising from those revelations.
It may be supposed that recent trends in other recent derivative lawsuits’ recoveries makes these suits more attractive to plaintiffs’ lawyers now than perhaps they were in the past.
This paper contrasts the post-tax returns of backdated at-the-money options to currently-dated in-the-money options (with the same strike price as the backdated options) and demonstrates that a Canadian executive can earn a significantly larger after-tax return from backdated options compared to a US executive.
We tie this to the favorable Canadian tax treatment of executive options relative to their treatment in the United States.
The Tim Sloan era has begun at Wells Fargo but the old problems remain.
The newly installed chief executive faces a plethora of challenges following a sales practices scandal that felled his predecessor John Stumpf.The derivative lawsuit filed against the Hollinger board resulted in a million settlement (here) – funded entirely by D & O insurance – and the Oracle derivative settlement resulted in Larry Ellison’s payment of 0 million to charity, as well as his payment of the company’s million attorneys’ fees.