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the much different – and more financially beneficial – tax rules that apply when issuing “at the money” or "out of the money" stock options.

Additionally, companies can use backdating to produce greater executive incomes without having to report higher expenses to their shareholders, which can lower company earnings and/or cause the company to fall short of earnings predictions and public expectations.

After all, stock option backdating is all the rage these days.

You'd think they'd be up to their eyeballs in rope.

The act of options backdating has become much more difficult as companies are now required to report the granting of options to the SEC within two business days.

This adjustment to the filing window came in with the Sarbanes-Oxley legislation.

Backdating is dating any document by a date earlier than the one on which the document was originally drawn up.

The process of granting an option that is dated prior to the date that the company granted that option.

In this way, the exercise price of the granted option can be set at a lower price than that of the company's stock at the granting date.

This process makes the granted option in-the-money and of value to the holder.

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