Upper Saddle River, N.J. - September 13, 2006 - The government´s investigation into the excesses of executive compensation has now expanded into the practice of granting backdated stock options, with at least 100 companies now under the microscope. This seemingly widespread and highly questionable practice has triggered the government´s consideration of ways in which to put a lid on what many consider to be an abuse of executive compensation.
IRS Section 162m, in force since 1993, allows companies to deduct compensation above $1 million, for certain executives, only when it is performance-based. The rules interpreted stock options as being performance-based, whereas restricted stock grants are not, if the restriction is tied to time vesting.
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