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In short, the safest course for both simple contracts and deeds is for the parties to exchange by email pdf copies of executed signature pages together with – in the same email - a Word or pdf version of the whole agreement that has been executed.For example, transfers of real estate and powers of attorney be made by deed.How It Works For example, let's assume that John Doe is the CEO of Company XYZ.When he was hired, the Company XYZ board of directors offered John an attractive salary as well as an annual grant of 1,000 Company XYZ stock options.These example sentences are selected automatically from various online news sources to reflect current usage of the word 'backdate.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. What It Is In the finance world, backdating usually refers to the practice of changing the dates of option grants to one that is earlier than the actual grant date in order to place a lower exercise price on the options and thus enhance the potential profits from the exercise of those stock options.The practice sometimes also occurs in the insurance industry, whereby policy issuers make the effective date of a policy (or claim) earlier than the application date in order to obtain a lower premium for the customer (or obtain better claim results).
Why It Matters Granting stock options to employees is a generally accepted and perfectly legal form of compensating employees. Critics of backdating argue that the practice is difficult to detect and thus encourages boards and executives to use it to synthesize more creative compensation packages.Those options give John the right but not the obligation to purchase 1,000 shares of Company XYZ stock at the market price on the date of the grant.The board formally grants the stock options to John every year at its January board meeting.As a result, regulations in the Sarbanes-Oxley Act require companies to report option grants to the Securities and Exchange Commission within two business days.
In addition to being illegal, backdating isn't always a sure thing.
If lawyers are involved in the practice, they may also face disciplinary penalties under their professional conduct rules, such as having their practising certificate revoked.