Preventing backdating of Arabic sex chat numbers
I will let Chairman Olson speak to the steps the PCAOB is taking to address these issues from the auditing regulator's perspective, but I'd like to assure the Committee, and the public, that the Commission is working in close cooperation with the PCAOB in this important area. But here is a typical example of what some companies did: They granted an "in-the-money" option-that is, an option with an exercise price lower than that day's market price.They did this by misrepresenting the date of the option grant, to make it appear that the grant was made on an earlier date when the market value was lower.Very recently, we enacted new rules that will require, beginning with the next proxy season, the full disclosure of all aspects of executive and director pay and benefits.A key component of that disclosure will be compensation in the form of stock options, which has been a fast growing portion of executive pay since the early 1990s.The purpose of the new executive compensation rules is to make the CEO's pay understandable to the shareholders who own the company.
The new rules also require detailed disclosure of compensation in the form of stock options, which will show whether a company has backdated options, and if so, why.
Indeed, no expense would ever need to be recorded in the financial statements for fixed options that weren't granted in-the-money.