WAPO: The Next Options Scandal: How to pay executives under the table

Sunday, June 11, 2006; Page B06

snip

The latest abuse concerns the suspicious dates on which options are granted. At more than 30 companies, executives have received options on a day when their firm's share price was at a low; the subsequent rise in the price has made the options valuable. As the Wall Street Journal has reported, top executives at KLA-Tencor Corp., a maker of semiconductor equipment, were awarded options on two days in 2001. The first day marked the low point of the firm's share price in the first half of the year. The second day marked the low point in the second half.

The chances of this being a coincidence are around one in 20 million. It seems likely, therefore, that the options were gamed: Perhaps the issue date for the options was chosen retrospectively, so that the firm could look back on a six-month period and pick the most advantageous date from the point of view of the executives. If so, a mechanism that was supposed to reward performance was used instead to pay bosses irrespective of performance. The aim was to disguise the scale of executive pay and to make it look more merit-based than it was.

http://www.washingtonpost.com/wp-dyn/content/article/2006/06/10/AR2006061000757.html

officers. I mean, if you do you're in for a very rude awakening.