LA Biz Observed: Disconnect on backdating

Disconnect on backdating

Mark Lacter • Bio • Email

Item #1
The WSJ's Charles Forelle, James Bandler and Mark Maremont win a George K. Polk Award for revealing the widespread practice of backdating stock-option awards that have allowed executives to increase their compensation. The stories set in motion federal investigations involving more than 130 companies (including a dozen or so in Socal).

Item #2
DealBreaker's John Carney says that the WSJ's reportage "rests on a very fundamental misunderstanding of how options are awarded." Carney argues that the backdating stuff wasn't a big deal at all. "We're not picking on lightweights here," he blogs."We think the public is entitled to a little better from prize winners." He's really ticked off at the prospect of the Journal being a Pulitzer candidate.

But here's the thing: If the Journal is wrong, so are the academics who first flagged the problem and the federal investigators who have filed complaints against the backdating executives and the corporate boards that have axed their top managers. Are they all ignorant of how stock options work? Just wondering.

2:19 PM Tuesday, February 20 2007 • Link
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