Number: RL33926
Title: Stock Options: The Backdating Issue
Authors: James M. Bickley and Gary Shorter, Government and Finance Division 
Abstract: While undisclosed backdating of stock options is the focus of this report and the most important type of timing manipulation, it should be noted that there are other forms of timing manipulation, which are discussed in Appendix A. In some cases when more than one form of timing manipulation occurs, it may be difficult to empirically separate the relative magnitude of the cost to the shareholders of these different forms of manipulation, including backdating. In order to fully understand the backdating issue, this report covers the following topics: illustration of undisclosed backdating, types of stock options, growth of stock options in the 1990s, the extent of timing manipulation of options, the potential costs of backdating, key legislative and regulatory developments, gatekeepers, and potential policy options.
Pages: 39
Date: January 2, 2008