Reuters reported a while back on a twist to the backdating of options that is attracting a lot of attention:
Cablevision Systems Corp. awarded options to an executive after his 1999 death, backdating them so that they appeared to have been granted while he was still alive, a regulatory filing revealed. A newspaper report said the executive’s estate was the beneficiary. The cable operator also improperly granted options to a former compensation consultant, accounting for them as if the consultant were a Cablevision employee, the company said in a filing with the U.S. Securities and Exchange Commission. The deceased executive was not named in the filing but he was identified by the Wall Street Journal as former Vice Chairman Marc Lustgarten.
Professor Bainbridge remarks:
Options are supposed to be used as incentive compensation, but it’s hard to see how you incentivize a dead man.
Kevin Drum offers:
Is there anything too revolting for these guys to do in pursuit of another buck? And they wonder why us liberals think they need an occasional watchful eye?
Speaking of watchful eyes – someone call the IRS. How was this transfer of wealth from a dead guy to his heirs treated in terms of Estate taxation? Pardon me for being a little suspicious, but did these schemers find a way to end-run the taxman?
Finally, the following suggests that the executives of Cablevision Systems Corp. might have to address a few lawsuits from the shareholders:
The company said in the filing that its financial statements for 2003, 2004 and 2005 and other financial data should be restated as a result.