Journal of Civil Rights and Economic Development Volume 23 Issue 1 Volume 23, Spring 2008, Issue 1 Article 7 March 2008 Stock Option Backdating: The Scandal, the Misconception & the Legal Consequences Jodell R. Nowicki Follow this and additional works at: https://scholarship.law.stjohns.edu/jcred Recommended Citation Nowicki, Jodell R. (2008) "Stock Option Backdating: The Scandal, the Misconception & the Legal Consequences," Journal of Civil Rights and Economic Development: Vol. 23 : Iss. 1 , Article 7. Available at: https://scholarship.law.stjohns.edu/jcred/vol23/iss1/7 This Note is brought to you for free and open access by the Journals at St. John's Law Scholarship Repository. It has been accepted for inclusion in Journal of Civil Rights and Economic Development by an authorized editor of St. John's Law Scholarship Repository. For more information, please contact
[email protected]. STOCK OPTION BACKDATING: THE SCANDAL, THE MISCONCEPTION & THE LEGAL CONSEQUENCES JODELL R. NOwIcKI* With the barrage of recent corporate scandals, including the well-publicized fall of Enron,' a recent closer scrutiny of corpo- rate executive practices has brought to light additional corporate malfeasance in the form of stock option backdating. 2 This paper will familiarize and clarify which corporate practices regarding backdating are legal versus those that are illegal, thereby sub- jecting companies and individuals to violations of state and fed- eral law. I. WHAT IS A STOCK OPTION AND How CAN IT BE BACKDATED TO CREATE AN ADVANTAGE? A stock option gives the recipient of the grant the right to buy a company's stock at a certain exercise or "strike" price.