Companies caught backdating

If you deliberately burn down your house, your insurance company is likely to balk at writing a check to cover the damage.

Does that same principle hold true in the corporate world?

That's something to be thrashed out in coming months as executives and board members caught up in the stock-options backdating scandal discover whether their insurers will pick up the tab for millions of dollars in legal expenses -- some of it possibly due to malfeasance by the insured people.

More than 135 companies, a quarter of them in Silicon Valley, are carrying out internal investigations or are under review by the Department of Justice or the Securities and Exchange Commission over options grants.

Comverse Technology, Inc., founded in Israel, was a technology company located in Woodbury, New York in the United States, that developed and marketed telecommunications software.

The company focused on providing value-added services to telecommunication service providers, in particular to mobile network operators.

D&O insurance When lawsuits and criminal or regulatory investigations target folks in the boardroom and executive suite, a type of insurance policy called directors and officers insurance, often abbreviated as D&O, comes into play.Take this example, from The Wall Street Journal, which began investigating the practice last fall: "Suppose an executive gets 100,000 options on a day when the stock is at .Exercising them after it has reached would bring a profit of times 100,000, or million.That exercise price, or strike price, usually takes one of three forms: the closing price on the day of the grant; an average of the highs and lows of the day; or the closing price from the previous day.The lower the strike price, the greater the potential for making money when exercising the options.Clearly, the Enron trials have not closed the book on corporate fraud.A new boardroom scandal is roiling Wall Street: stock options backdating.Starting in the late 1990s, Comverse's voice messaging software became its main product and the company grew rapidly with the surge in mobile phone use, passing the

D&O insurance When lawsuits and criminal or regulatory investigations target folks in the boardroom and executive suite, a type of insurance policy called directors and officers insurance, often abbreviated as D&O, comes into play.

Take this example, from The Wall Street Journal, which began investigating the practice last fall: "Suppose an executive gets 100,000 options on a day when the stock is at $30.

Exercising them after it has reached $50 would bring a profit of $20 times 100,000, or $2 million.

That exercise price, or strike price, usually takes one of three forms: the closing price on the day of the grant; an average of the highs and lows of the day; or the closing price from the previous day.

The lower the strike price, the greater the potential for making money when exercising the options.

Clearly, the Enron trials have not closed the book on corporate fraud.

A new boardroom scandal is roiling Wall Street: stock options backdating.

Starting in the late 1990s, Comverse's voice messaging software became its main product and the company grew rapidly with the surge in mobile phone use, passing the $1 billion mark in revenues.

It established a formidable position in the worldwide mobile voicemail management market and sold a popular short message service center (SMSC) product.

Dozens of companies – including United Health Group, Comverse Technology, Vitesse Semiconductor and Affiliated Computer Services – have caught the eye of the Securities and Exchange Commission and the Department of Justice for the timing of their stock option grants.

The question: did these companies backdate options grants – and falsify records – to make them more lucrative for their top employees?

||

D&O insurance When lawsuits and criminal or regulatory investigations target folks in the boardroom and executive suite, a type of insurance policy called directors and officers insurance, often abbreviated as D&O, comes into play.Take this example, from The Wall Street Journal, which began investigating the practice last fall: "Suppose an executive gets 100,000 options on a day when the stock is at $30.Exercising them after it has reached $50 would bring a profit of $20 times 100,000, or $2 million.That exercise price, or strike price, usually takes one of three forms: the closing price on the day of the grant; an average of the highs and lows of the day; or the closing price from the previous day.The lower the strike price, the greater the potential for making money when exercising the options.Clearly, the Enron trials have not closed the book on corporate fraud.A new boardroom scandal is roiling Wall Street: stock options backdating.Starting in the late 1990s, Comverse's voice messaging software became its main product and the company grew rapidly with the surge in mobile phone use, passing the $1 billion mark in revenues.It established a formidable position in the worldwide mobile voicemail management market and sold a popular short message service center (SMSC) product.Dozens of companies – including United Health Group, Comverse Technology, Vitesse Semiconductor and Affiliated Computer Services – have caught the eye of the Securities and Exchange Commission and the Department of Justice for the timing of their stock option grants.The question: did these companies backdate options grants – and falsify records – to make them more lucrative for their top employees?

billion mark in revenues.It established a formidable position in the worldwide mobile voicemail management market and sold a popular short message service center (SMSC) product.Dozens of companies – including United Health Group, Comverse Technology, Vitesse Semiconductor and Affiliated Computer Services – have caught the eye of the Securities and Exchange Commission and the Department of Justice for the timing of their stock option grants.The question: did these companies backdate options grants – and falsify records – to make them more lucrative for their top employees?

You must have an account to comment. Please register or login here!