Stock Option Paper

STOCK OPTION PAPER Tina Kelly ACC 201 Principles of Financial Accounting instructor: Susanne Elliot October 15, 2012 In new months there have been many intelligence service stories in the contract about executive pay with melody survival of the fittests.  This type of compensation occurs when an executive is granted the pick to purchase the corporations stock at a certain price designer(prenominal) in the future. Corporations allow for their chief operating officers to purchase options in stocks as an incentive of pay. This allows for them to pay chief operating officers a salary of $200,000 annually, however give their CEOs an hazard to annually earn tens of millions of dollars. Unfortunately as we have go through in live situations non all CEOs follow their ethical function to their organization and society. CEOs ar back bring in there stock options to a point in the companys fiscal year, and buying stock at a price when the stock was peaking. For exampl e, former UnitedHealth company CEO William McGuire legitimate 14.6 million stock options on the same day that UnitedHealth Groups shares fell to their final price for the year (American alliance of Labor, 2012). Purchasing stock options in a time of a companys news report when the stock was at its peak is called backtracking.

However many incorporated CEOs do this and invest millions of dollars to boost study return profits. The occupation for McGuire and other backdating CEOs is they may have violate accounting rules, body politic corporate law, federal securities laws and tax laws. In some cases, alike that of former Comverse CEO Kobi Alexander, who fled to Namibia, the U.S. Department of evaluator concluded that CEOs! move criminal fraud (American Federation of Labor, 2012). It is of the essence(predicate) to note that most of these practices are not inherently illegal. If no documents are forged, and if practices are justly approved and disclosed, appropriately accounted for, properly treated for tax purposes and in accordance with the terms of the option plan, most option granting...If you deprivation to get a just essay, order it on our website: OrderEssay.net

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