The ethics of repricing and backdating employee stock options

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As such it is unlikely that everyone in society would accept as a universal rule that management should be given preferential treatment.It is difficult to say that manipulating stock options, through any of these four tactics, is the sign of a virtuous person.Second, we discuss various stakeholder approaches (e.g., government, directors, managers, and shareholders) by which conflicts of interest (i.e., the agency problem) can be addressed.Third, we assess the practice of backdating stock options, as an illustration of the agency problem, in terms of whether the practice is legally acceptable or ethically justifiable.

They are given to executives as a form of noncash compensation.

An analysis of the ethics of repricing, backdating, spring-loading, and bulletdodging is contained in the article “Ethics of Options Repricing and Backdating: Banishing Greed from Corporate Governance and Management.” In their article that was published in the October 2007 issue of The CPA Journal, Raiborn, Massoud, Morris, and Pier present four ethical arguments.

The theory of justice says that equals should be treated equally, and unequals treated unequally in proportion to their inequalities.

Compensation methods that cause the tone at the top to be perceived as a cacophony of greed should be banished from the orchestra.

Questions Do you agree or disagree with the four ethical arguments summarized above and contained in more detail in the article by Raiborn, Massoud, Morris, and Pier?

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