Broadcom options backdating indictment sex dating in thorp washington
In researching this post, I came across a number of recent reports on Henry Nicholas III, the once high-flying CEO and cofounder of Broadcom. While the story was enthralling, I didn't understand what any of it had to do with a federal investigation into stock option backdating.
The allegations of illicit sex, drugs, and rock and roll reminded me of the 60s ... Sure, Broadcom had to take a .2 billion charge to fix the accounting mess left by the company's former executives.
A series of two follow-up studies by professors at other universities suggested that the uncanny ability to time options grants could only have happened if the granters knew the prices in advance.
A Pulitzer Prize winning story published in the .) As a result, firms restated earnings, fines were paid and executives lost their jobs - and their credibility.
A business run without integrity is a scary proposition.
From a consumer's perspective, customers rely on companies to provide goods and services.
After all, stock option backdating is all the rage these days.
Performance-based compensation, on the other hand, was deductible.Although this practice gave the senior executives significant stock holdings, since the grant was issued at-the-money, the share price had to appreciate before the executives would actually earn a profit.A 1982 amendment to the tax code created an incentive for executives and their employers to work together to break the law.The roots of the scandal date back to 1972, when an accounting rule was put in place permitting companies to avoid recording executive compensation as an expense on their income statements so long as the income was in the form of stock options that were granted at a rate equal to the market price on the day of the grant, often referred to as an at-the-money grant.
This enabled companies to issue enormous compensation packages to senior executives without notifying shareholders.
and dozens of lesser-known technology firms were implicated in the scandal. .) Read on to find out how the scandal emerged, what brought it to and end and what you can learn from it now.