This is a practice that was once viewed as little more than financial sharp practice, but in 2006 exploded into major scandal for some of Silicon Valley's biggest names.
Rim backdating scandal google maps mobile real time updating
A stock option granted, for example, on the day you join the company allows you the right to buy that share at that day's price, but not until a fixed period - say a year - has elapsed.
If the price has risen in that time you can buy the share at the option price, sell it and pocket the profit.
One explanation was that options were being backdated to before major rises.
The former CEO of a US tech giant will have 21 long months in which to rue the day he ever heard of stock option backdating.
Brocade Communications' Gregory Reyes has been sent to prison for 21 months and fined £7.5m for backdating options.
US technology employees may live on their salaries, but whether they get truly rich or not depends on their share of the company.While lucky early employees might get actual shares, most workers will depend on stock options to cash in on the tech boom.If the price has fallen, you simply do not buy the share.Backdating is the practice of rewriting the agreement so that the option appears to have been granted at an earlier time when the share was even cheaper.That way you make even more money when you sell the share at today's prices.The practice is not actually illegal in US law, as long as you tell the shareholders it is going on.