ESOs are usually granted at-the-money, i.e., the exercise price of the options is set to equal the market price of the underlying stock on the grant date.Because the option value is higher if the exercise price is lower, executives prefer to be granted options when the stock price is at its lowest.In addition, it provides a line of connectivity products, which comprise mixed-signal physical media devices, physical layer devices, crosspoint switches, and signal integrity devices that are used for the connection of systems via optical fiber, copper cable, or backplanes.
The case is In re Vitesse Semiconductor Corporation Derivative Litigation, Lead Case No.
Backdating allows executives to choose a past date when the market price was particularly low, thereby inflating the value of the options.
An example illustrates the potential benefit of backdating to the recipient.
The Securities and Exchange Commission today simultaneously filed and settled civil fraud charges against California-based integrated circuit maker Vitesse Semiconductor Corp.
and four former senior executives for inflating revenue and backdating stock options.
Law360, New York (October 12, 2007, AM EDT) -- Vitesse Semiconductor Corp.