Example of backdating

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A 2004 NY Times article describes this case in greater detail (the article is available here), and so does a 2006 article in Tax Notes Magazine (available here).

(Under APB 25, the accounting rule that was in effect until 2005, firms did not have to expense options at all unless they were in-the-money.

There is also some relatively early anecdotal evidence of backdating.

A particularly interesting example is that of Micrel Inc.

The graph below shows the dramatic effect of this new requirement on the lag between the grant and filing dates.

To the extent that companies comply with this new regulation, backdating should be greatly curbed.

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