Question

Backdating of stock options is unethical because: Group of answer choices It changes the exercise price on options to benefit top executives. It changes the exercise date on options to benefit top executives. It favors top executives over other company employees with respect to the number of options. It purposefully manipulates the option criteria that determine their value.

Answer 1

It changes the exercise price on options to benefit top executives

Step-by-step explanation:

Many enterprises offer stock options to their employees. Often times, these options are offered to everybody at the same time. Normally, the first ones to exercise their options can buy them for a lower price, so it is advantageous to buy as early as possible before demand drives the price up. However, some top executives backdate their stock options. This benefits them because the exercise price on their options will be lower. This is considered unethical, because they are abusing their position to profit.