The ethics of repricing and backdating employee stock options

Our Office of Economic Analysis then analyzed data and refined the areas of concern.

From my perspective, the collective efforts by the SEC are a model way of addressing an issue — proceeding from various perspectives to come up with practical and wide-ranging solutions. I'd like to address this on two fronts — first, I'll discuss how we got to our efforts at the Commission and then I'd like to step even further back and talk about some of my impressions on how we ended up with the option issues we are confronting.

First, on the SEC front, our investigations are born of a conscious effort to proactively think about where problems might be, to methodically inquire whether there actually are problems, and then to pursue the best ways to address any problems that exist.

Thank you so much for spending time today on this important topic.

I thought I'd talk a little about where we are from an Enforcement perspective.

At the same time, there was sharp rise in the overall level of executive compensation (some would say astronomical), despite the million-dollar salary deductibility cap.

In this environment, cash-strapped companies found stock options an attractive way to provide competitive compensation without further tapping their limited cash flows.

My views are my own and do not necessarily reflect the views of the Commission or any other member of the staff. In addition to our investigations, there is substantial criminal interest in options matters from United States Attorneys' Offices nationwide.

In recent months, the SEC has brought two enforcement actions — one relating to Brocade and another involving Comverse.

These rules, in combination with the prescient provisions of Sarbanes-Oxley requiring timely reporting of stock option grants, will go a very long way toward preventing the kinds of problems we are seeing today from occurring to the same degree in the future.

Tags: , ,