Ethics, Business

Business ethics are on a downturn. There are numerous cases involving the backdating of stock options. A WSJ story tells how it works: “Stock options give employees the right to buy shares in the future at the market price on the date a grant is approved. If the stock rises later, the recipient can cash in the option to take a profit. Backdating a grant to a prior date when the price was lower increases the award's value.” H-P Settles Suit Tied to Mercury And Backdating, Benjamin Pimentel, October 16, 2007, WSJ. One wonders why a person would engage in this type of activity? It seems so obviously wrong. Yet there seem to be lots of these cases and some involve the great leaders of industry such as Steve Jobs of Apple. In January 2007 Bloomberg.com reported that at “least 200 companies are being investigated for changing the dates of options grants to inflate their value. Companies have taken over $8.1 billion in charges or restatements to account for backdated options grants.” In one situation Apple reported a fake board meeting which allowed backdated options for Steve Jobs and others. Ibid.