DISQUS

DG · 2 years ago

Law and order!

Jay · 2 years ago

This article and many of the articles I read are under the mistaken assumption that lowering the price of options was somehow wrong in the 1990s.

This is not the case-- it was perfectly legal, and common, for companies to reprice options when their stock had taken a fall so that they could continue to hire new employees. Jobs going to the mat in 1997 or 2001 is perfectly fine, and options in those eras should have been priced at the lowest price in recent history.

The scandle is about backdating-- and this only comes after the IRS changed the rules on everybody and options started having to be claimed as expenses. And this is only comes up because the IRS decided that options have to be priced at the price on that day, and not at the lowest price recently, etc.

And ultimately, of course, is the fact that there is nothing immoral about backdating options-- companies have the unalienable right to compensate their employees on terms that they choose. And the option strike price is just a factor in the compensation they choose-- not some sort of cheating.

Of course it wouldnt' be the first time the government has thrown someone into jail for doing something perfectly reasonable and moral.

Back-dating laws doesn't seem to be considered wrong.

Matt Marshall · 2 years ago

Ok, Jay, but Apple is apparently arguing that Jobs didn't appear to understand why back-dating was a problem. I think the point is that he's shown quite a bit of sophistication about these things over the years.

dumbfounder · 2 years ago

Jay, backdating on options is about the same as cheating on taxes. It is illegal now because you are actually giving someone something more valuable than you are claiming, and thus not allowing Uncle Sam to properly tax on it.

Bjorn · 2 years ago

i think jay's point was valid that it was perfectly legal in the past before IRS decided the options backdating became an unfair practice.

I am taking the Jim Clark post into perspective here too and wonder aloud whether his resignation is a symptom of over-legislating in the corporate finance and option treatment field. Is Wall Street becoming less business-friendly, especially so on startups which had relied on options and IPO as HR carrots and exit financing options for their investors respective?