Scandals are rampant in big business these days and three well-known technology companies are joining the club. The heads of Internet news publisher CNET Networks Inc. (CNET) , security software firm McAfee Inc. (MFE), and online recruitment service Monster Worldwide Inc. (MNST) all announced their resignations due to stock scandals.
The trend of improper backdating of stock options, a practice used most often to inflate the value of stock grants to employees, has swept the business world leaving at least 135 companies acknowledging their guilt or are being investigated.
The three companies named above are the latest casualties of this practice. As long as the options are properly accounted for on a company's earnings sheets and tax returns it isn't illegal. However, the rules are not being followed by many companies.
Typically, dates are picked for stock grants when the purchase price is low, so when the stock is sold, the holder can make more money.
The founder of Cnet resigned yesterday over the improper backdating options from 1996 through 2003. McAfee fired its president and announced that a chief executive would be resigning. Monster's chief executive resigned and last week Apple Computer Inc. (AAPL) board member Fred Anderson resigned over stock options.
The SEC and Justice Department are investigating companies as varied as Home Depot Inc. (HD) and the Cheesecake Factory Inc. (CAKE).
Know More about stock options at GrowYourFunds.com.
Comment Preview