Backdating stock options wikipedia

19 Apr

Job ads in the classifieds mention stock options more and more frequently. Are employees guaranteed a profit just because they have stock options?Companies are offering this benefit not just to top-paid executives but also to rank-and-file employees. The answers to these questions will give you a much better idea about this increasingly popular movement.After a given time period, grantees are given back the stock they used to pay for their options. For example, in order to satisfy the expenses of an acquisition, an acquiring company may use a combination of 2 for 3 stock-for-stock exchange with shareholders of the target company and a tender offer of cash. Where possible, grantees often take advantage of a stock-for-stock exchange, as they usually increase a grantee's ownership position and require no cash outlay.Non-employee shareholders argue that stock-for-stock option price satisfaction adds to the already high expense of granting employees options, as the employees end up not having to pay the option price, which can add up to be a significant amount of cash if all employees granted options take advantage of stock-for-stock exercises.For example, a bond that has an embedded option, giving the issuer the right to call the issue, could be less valuable to an investor than a noncallable bond.This is because the investor could lose out on interest payments to which he would otherwise be entitled if the bond were held to maturity (assuming the issuer does call the issue).The manufacturer and customer needn't bother negotiating the wording for those responsibilities. A requirement like this can be handy if the Receiving Party will be dealing with information whose distribution is restricted by law, for example personal health information or export-controlled information. The obligations of sec­tion 6.1.3 apply only during the Confidentiality-Obligation Period; during that time, though, those obligations will continue to apply to all Specimens of Confidential Information, even after any termination or expiration of the Agreement. of Confidential Information is any copy of, and any physical object embodying, Confidential Information — for example, any paper- or electronic copy and any specimen of hardware — where the copy or physical object is in the possession, custody, or control of: (i) the Receiving Party, and/or (ii) any individual or organization to which the Receiving Party made Confidential Information accessible.Instead, they likely will "order from the menu" of the INCOTERMS 2010 publication: By specifying a standardized three-letter abbreviation — DDP, EXW, or whatever — the parties can quickly signal which of that publication's pre-defined terms and conditions they wish to use. This provision uses a prudent-measures standard instead of an absolute obligation. Disclosing parties will normally be reluctant to agree to a fixed confidentiality period. (b) IF: The Disclosing Party makes a seasonable written request following any termination or expiration of the Agreement; THEN: except as provided in sections 6.1.3.8 and (if applicable) 6.2.22, the Receiving Party will promptly: (1) return Specimens of Confidential Information to (i) the Disclosing Party, or (ii) another individual or organization designated in writing by the Disclosing Party; and (2) subject to sec­tion 6.1.3.9 (if applicable), destroy any Specimens not returned.

(Stock Exchange) commerce the right to buy (call option) or sell (put option) a fixed quantity of a commodity, security, foreign exchange, etc, at a fixed price at a specified date in the future.An embedded option is part of another security, and as such does not trade by itself.Nevertheless, it can affect the value of the security of which it is a component.Certain states also have adopted similar tax provisions.(For example, California imposes an additional 20 percent state tax, interest, and penalties.) Implications for discount stock options Under Section 409A, a stock option having an exercise price less than the fair market value of the common stock determined as of the option grant date constitutes a deferred compensation arrangement.In a convertible bond, however, an embedded option may give the holder the right to exchange the bond for shares in the underlying common stock.The presence of embedded options affects the value of the security, and investors should be aware of any embedded options and the potential outcome or impact.In the same vein, to save time, contract drafters (and reviewers) can consider incorporating selected Common Draft sections, or even entire contract drafts, by reference and specifying any desired variations or modifications — this could be thought of as "drafting by exception" or even as like INCOTERMS on steroids.* * For clarity: The Common Draft project is not sponsored, endorsed by, or otherwise associated with the International Chamber of Commerce, which produces the INCOTERMS® 2010 rules. That's because doing so can result in destruction of the disclosing party's trade-secret rights in its confidential information after the end of the confidentiality period. An obligation to return or destroy Confidential Information might not be practical if (for example) Confidential Information is embodied in a deliverable (for example, custom-developed computer software, or a physical object) that the receiving party will have the right to keep on using; this might be the case in a services agreement.Suggestion: If you incorporate one or more Common Draft provisions by reference, consider using your browser's "Save to PDF" or "Print to PDF" capability to preserve a copy of this deskbook for future reference. Receiving parties, of course, generally prefer to have fixed expiration dates for confidentiality obligations. PRO TIP: Unfortunately, sometimes parties forget about return-or-destruction obligations.The company is required to withhold applicable income and employment taxes at the time of option vesting, and possibly additional amounts as the underlying stock value increases over time.Additional information Below are links to all of WSGR’s client alerts on 409A.