Backdating and Repricing of Stock Options

Backdating and Repricing of Stock Options
Introduction
It is indeed true that backdating and restocking of stock options has become a serious public issues over the past few years. This issue was discovered after the Enron and WorldCom scandals which resulted to the enforcement of the Sarbanes-Oxley Act of 2022. It is important to note that the timing of backdating and restocking of stock options happens in the years that followed the internet stock market in 2001 and 2001. Additionally, these events were also followed by the events of September 11, 2001. Therefore, this essay will elaborate what is backdating and repricing of stock options, the SEC investigation of Apple backdating its stock options and deposition of Steve Jobs. Lastly, the ethics of backdating stock options will be addressed.
Explain in detail what is meant by the backdating and repricing of stock options.  Be specific.
Stock options give the owner the right to buy the common stock of a company at a specific price. This right is normally available over a data range. For example, in the next six years. Therefore, stock option backdating entail setting the issuance date of options before the actual issuance date. By doing this, the price option for each stock can be lower for the receiver allowing one to make more profits when the options are finally exercised. Backdating of stock options is considered to be illegal if such an action is taken without informing shareholders and other stakeholders in the organization. In most cases backdating becomes difficult to trace in an organization since it is reflected immediately in the organizations financial statements. According to Veld & Wu (2014), backdating can be traced by examining the date stock options were authorized and tracing the back date when documentation was completed. If there a disparity between the dates, then it means backdating took place.
According to Veld & Wu (2014), repricing of stock options happens when a company retires employee stock options that have lost their value with new options at a lower price. Repricing of stock options happens when the shares of an organization falls below the original price of employee stock options. Some of the instance when repricing took place was after the internet bubble burst in 2000 and the financial crisis of 2008-2009.
Conduct research regarding a SEC investigation of Apple backdating its stock options and the deposition of Steve Jobs.  Summarize in your own words the results of that disposition.  Did anyone at Apple get into trouble with the SEC in regards to the backdating of the stock options?  If so, who and why?
In April 2007, the Securities and Exchange Commission filed charged against Apple Inc. for being involved in improper stock option backdating (Heracleous & Klaering, 2014). Nancy Heinen was accused of participating backdating of options that were granted to Apple’s top officials. As a result, the organization underreported expenses by almost $40 million. According to SEC, Apple changed those dates to sugarcoat executive packages for Steve Jobs. As a res...