Backdating and spring loading stock options Free sexchat not registration

(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.

However, under the new FAS 123R, the expense is based on the fair market value on the grant date, such that even at-the-money options have to be expensed.) Because backdating is typically not reflected properly in earnings, some companies that have recently admitted to backdating of options have restated earnings for past years. The exercise price affects the basis that is used for estimating both the company's compensation expense for tax purposes and any capital gain for the option recipient.

Timing an option grant to precede the public news release provides the option holder with an almost instant profit.

Spring-loading options is often a controversial practice.

In this case, the option might be out of the money long before the investor can exercise it.