If, however, Company XYZ decides to backdate the options, it could change the paperwork to state that it actually granted those stock options to John on, say, June 15, 2008, when the stock was only trading at per share.This would mean that John's 2012 stock option grant would have an exercise price of per share instead of per share.Backdating is the practice of marking a document, whether a check, contract or another legally binding document, with a date that is before what it should be.Backdating is usually disallowed and even can be illegal or fraudulent based on the situation.The backdating scheme involved moving an effective date for the exercise of stock options from when the options were 'out of the money' to a date that made the options 'in the money' to allow certain executives to exercise their options profitably.Companies such as Comverse, Verisign, F5 Networks, Intuit and Mc Afee - as well as Home Depot, Michael's Stores and United Health Group, to name a few - all engaged in this fraudulent activity to varying degrees and were forced to pay fines and penalties and conduct time-consuming and expensive restatements of their books.
So having a life insurance age change during underwriting is most likely going to result in a higher final premium when the policy is issued.
How It Works For example, let's assume that John Doe is the CEO of Company XYZ.
When he was hired, the Company XYZ board of directors offered John an attractive salary as well as an annual grant of 1,000 Company XYZ stock options.
Let's say that John now decides to exercise his stock options.
On the day he decides to exercise his options, Company XYZ shares are trading at .
Search for date backdating:
He pays the $15 per share exercise price and can turn around and sell those shares on the exchange for $50 each, netting a profit of $35 per share, or $35,000.