Back dating of stock option
No matter how much particular practices may be decried, the consensus seems to remain that corporate success is attributable to a very few people at the top, with everyone else pretty much being replaceable parts.
Clearly, the Enron trials have not closed the book on corporate fraud.
Any gain a company makes is assumed to be the sole result of the extraordinary wisdom of this one very special person, not the collective efforts of hundreds or thousands of employees.
Nejat Seyhun of the University of Michigan for the newspaper showed that that options granting practices between 20 often failed to comply with the Sarbanes-Oxley requirement that grants of awards to executives be reported within two days of board approval (T"he Dating Game: Do Managers Designate Option Grant Dates to Increase Their Compensation? Prior research at Erik Lie at the University of Iowa found a pattern of probable options backdating in a number of companies prior to 2002.The results focused on the 51% of the grants during the period that were unscheduled and at-the-money.A separate analysis of grants issued at other than the current price of the shares at grant also shows a pattern of manipulation, but it was only about 60% as prevalent for this type of award (these awards were not very common at the time, however, because of adverse accounting rules).As important as the issue of executive equity compensation is, it should not blind us to a more important concern.Research has definitely shown that broadly-granted equity awards improve corporate performance; concentrated grants force it down (the details are in the article Broadly Granted Stock Options Improve Corporate Performance).