The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu The leading online blog in the fields of corporate governance and financial regulation. Sat, 09 May 2026 11:30:59 +0000 en-US hourly 1 https://wordpress.org/?v=6.5.8 https://corpgov.law.harvard.edu/wp-content/uploads/2024/02/cropped-photography-4-e1706898544564-1-32x32.png Option Backdating and Its Implications – The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu 32 32 Option Backdating and Its Implications https://corpgov.law.harvard.edu/2008/04/21/option-backdating-and-its-implications/?utm_source=rss&utm_medium=rss&utm_campaign=option-backdating-and-its-implications https://corpgov.law.harvard.edu/2008/04/21/option-backdating-and-its-implications/#comments Mon, 21 Apr 2008 18:05:14 +0000 http://blogs.law.harvard.edu/corpgov/2008/04/21/option-backdating-and-its-implication?d=20150106114846EST Posted by Jesse Fried, Harvard Law School, on Monday, April 21, 2008
Editor's Note:

This post is from Jesse Fried of Harvard Law School. The blog featured earlier posts on the option backdating and its corporate governance implications by Larry Ribstein here, by Ted Mirvis and Paul Rowe here, and by Lucian Bebchuk here, here, here, here, and here.

I have just posted on SSRN a paper that analyzes three forms of secret option backdating used by public firms and their significance for various corporate governance debates: Option Backdating and Its Implications. The current draft is available on SSRN here.

The three forms of option backdating analyzed are: (1) the backdating of executives’ option grants; (2) the backdating of non-executive employees’ option grants; and (3) the backdating of executives’ option exercises. The paper shows that each type of backdating less likely reflects arm’s-length contracting than a desire to inflate and camouflage executive pay. Secret backdating thus provides further evidence that pay arrangements have been shaped by executives’ influence over their boards. The fact that thousands of firms continued to secretly backdate after the Sarbanes Oxley Act, in blatant violation of its reporting requirements, suggests recent reforms may have failed to adequately curb such managerial power.

As I am continuing to work on this paper and a number of related projects, any comments would be most welcome.

]]> https://corpgov.law.harvard.edu/2008/04/21/option-backdating-and-its-implications/feed/ 2