erisa and global benefits
Another Stock Award Scandal?
By The Global Compensation, Benefits & ERISA Practice Group
About a decade ago, a stock option scandal arose from academic studies showing that the grants had to have been backdated because the exercise prices were timed to market lows (in order to maximize upside gain for the recipients). A new academic study
“CEOs reallocate news into vesting months, and away from prior and subsequent months. They release 5% more discretionary news in vesting months than prior months, but there is no difference for non-discretionary news.”
There is reason to expect the SEC to pursue enforcement efforts. On the one hand, the SEC has recently announced
Public companies will be smart to take steps to minimize their exposure because the next executive compensation scandal to reach headlines could involve the selective use of corporate news releases to increase stock prices in months when executives are cashing-out their stock awards. Developments such as these are often just right for inclusion in an annual (or more frequent) litigation update for audit and/or compensation committees.