Dead Men Get No Options... Unless They Work For Cablevision

from the how-it-goes dept

Fri, Sep 22nd 2006 12:55am — Mike Masnick

We haven't really talked that much about the stock options back dating scandal that seems to have impacted, well, just about every public technology company these days. At this point, it's not a surprise. Like many borderline questionable activities, it was one of those things that every company did, and plenty of lawyers said it was probably okay (or if not okay, no one would really care). Of course, now, suddenly the SEC does care, and so we're hearing all about it. Most of the stories are exactly the same, and not really worth discussing. Today, however, Cablevision took it up a notch as it was revealed that they didn't just backdate options, they backdated a bunch so a dead executive could get the options while he was alive. Well, to be more specific, that his estate could get them. The article notes that the exec in question was a close friend of the Dolans (the father and son who ran Cablevision until a little spat caused some problems). It's not entirely clear when the backdating happened, but kudos for Cablevision for adding a bit more pizazz to the options backdating story.

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9 Comments

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Sohrab, 22 Sep 2006 @ 1:31am

is this the same thing that Apple has been doing some internal investigation as they cliam?

If so, I dont really get what happened
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Mr Charley, 22 Sep 2006 @ 3:20am

What happened is as Mike described: After the exec died, the comapny dack-dated his stock options to a date *before* his death. That way the earnings went to his estate. You *can* take it with you after all!
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Mr Charley, 22 Sep 2006 @ 3:22am

Typo
I know typos are a top thread here. I meant to type "back-dated".
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Anonymous Coward, 22 Sep 2006 @ 6:10am

Think about the whole issue. If the company wants to give someone some money, just do it. Don't try to get cute and change the date of the option.

The SEC or the IRS or whatever doesn't really care what a company decides to pay its people, but you can't do things like options backdating. Either way, the company gives its executives money, so why go the backdating route? The answer is because either the company isn't being transparent about its accounting, and thats a big no-no.
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socrates3001, 22 Sep 2006 @ 7:43am

Back-dating would have other consequences. For one thing, any company that chooses to back-date a benefit would probably have to refile their annual reports for every year the back-dating affects.

It would be easier to change the benefit in the current year, for current employees, and pay the equivalent of the back-dated benefits (without back-dating) for everyone that would be affected by actually back-dating those benefits.
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Precision Blogger, 22 Sep 2006 @ 9:21am

Backdating options for a dead man makes sense ...
Backdating options for a dead man makes sense! This is a bout propeorly compensating highly skilled executives so that you can retain their services. If this dead man allowed himself to be hired by a competitor, he might start haunting the guys he used to work with. In the matter of stock options, you HAVE to show respect to the rich guy.
- PB
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back dater hater, 22 Sep 2006 @ 11:14am

Backdating doesn't just affect financial reporting
Its a total ripoff to shareholders. One might think that backdating doesn't hurt anyone as all they're doing is re-stating the datewhen the options were priced against the market. The problem is its equavilent to "drastically" changing the actual payout to the execs. Typically those amounts are approved by reps of the shareholders. Changing the dates does an end around for that process, sometimes its done by and for the people who are supposed to represent the shareholders...

The closest comparison would be to give the pres or congress the ability to secretely determine what their pay will and at the same time assume they weren't the people accountable for setting the amount. Its CRAP, its corporate corruption and like Enron is what's killing the market.
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Chuck Norris' Enemy (deceased), 22 Sep 2006 @ 12:36pm

Ken Lay
We should backdate Ken Lays stocks in Enron to collect before it crashed then use all the money to pay us back.
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pgl, 13 Oct 2006 @ 1:11pm

Unbelievable! But I have a question - will this income be suject to the Estate Tax or did they find someway to avoid that as well?!
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