Tina Kelly
ACC 201 Principles of Financial Accounting
Instructor: Susanne Elliot
October 15, 2012
In new months there have been many news stories in the contract about executive pay with stock survival of the fittests. This type of compensation occurs when an executive is granted the option to purchase the companys stock at a certain price designer(prenominal) in the future. Corporations allow for their CEOs to purchase options in stocks as an incentive of pay. This allows for them to pay CEOs a salary of $200,000 annually, however give their CEOs an hazard to annually earn tens of millions of dollars.
Unfortunately as we have go through in live situations not all CEOs follow their ethical responsibility to their organization and society. CEOs are back tracking there stock options to a point in the companys fiscal year, and buying stock at a price when the stock was peaking. For example, former UnitedHealth Group CEOÂ William McGuire received 14.6 million stock options on the same day that UnitedHealth Groups shares fell to their final price for the year (American Federation of Labor, 2012).
Purchasing stock options in a time of a companys news report when the stock was at its peak is called backtracking.
However many incorporated CEOs do this and invest millions of dollars to boost study return profits. The problem for McGuire and other backdating CEOs is they may have violate accounting rules, state corporate law, federal securities laws and tax laws. In some cases, like that of former Comverse CEO Kobi Alexander, who fled to Namibia, the U.S. Department of evaluator concluded that CEOs committed criminal fraud (American Federation of Labor, 2012).
It is of the essence(predicate) to note that most of these practices are not inherently illegal. If no documents are forged, and if practices are aright approved and disclosed, appropriately accounted for, properly treated for tax purposes and in accordance with the terms of the option plan, most option granting...If you want to get a just essay, order it on our website: Orderessay
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