Even now, dozens of senior managers are under investigation for "backdating" their share options—illegally manipulating the timing of grants to increase the likelihood of a payment.
He suspected that this was because executives would lock in options before good news was announced.Last year another professor, Erik Lie, looked at the information again and agreed with Mr Yermack's conclusion about the statistical impossibility of randomness, but came up with a new hypothesis about the cause, speculating that executives were backdating options.
Last week, the federal attorney in California's Northern District which includes Silicon Valley, home to many of the option-addicted tech firms that are the focus of the scandal announced a task force to focus on backdating.
But it is unclear whether shareholders knew that this was going on, and if not, whether they would have approved of it.By contrast, backdating options granted later to take advantage of past share-price movements is clearly illegal, and always has been, says Brian Hall of Harvard Business School.
Backdating itself is not illegal, though a lack of accurate disclosure of it may well be fraud.
Even likelier to be subject of criminal charges are the growing number of executives caught up in the fast escalating "options backdating" scandal.During the 1990s share options became arguably the favourite form of payment among top executives, who felt that options offered lots of lucrative opportunities and little risk.
The not-always-lovable Mr Jobs is still stuck in a greedy-looking share-option "backdating" scandal.
Although backdating options is unlikely to result in the 25-years-to-life terms widely expected to be handed to Messrs Lay and Skilling, it could certainly earn executives years behind bars.
Namibia does not have an extradition treaty with America.Mr Alexander and his former colleagues are accused of backdating share options to value them at low points in Comverse's share price.
This week Apple said its boss, Steve Jobs, had known about backdating at his firm but had been unaware of the accounting implications.In this section The airliner that fell to earth One up for LVMH Different strokes The fugitive Lifting the bonnet The thrill of the chase Not playing The cutting edge ReprintsAs firms struggle to restate their accounts, hedge funds are buying their bonds.
