A Number of Companies Were Accused of "Backdating" Executive Stock

question 15

Multiple Choice

A number of companies were accused of "backdating" executive stock options in the 2000s. Backdating is the procedure by which companies chose the date on which the stock was was most favorable (i.e., at its lowest) to act as the putative start date of the option grant. By permitting backdating, companies were essentially giving their executives a form of a

• A) Cliquet option.
• B) Shout option.
• C) Floating-strike lookback option.
• D) Fixed-strike lookback option.

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Definitions:

Compensation of Employees

All forms of financial returns and tangible services and benefits employees receive as part of an employment relationship.

Human Capital

The collective skills, knowledge, and experience of an individual or workforce, viewed as an asset.

Proprietors

Owners of a business or holders of property.

Production Input

Any resource used in the creation of goods or services, such as labor, raw materials, and capital.