Backdating contract illegal

Alternatively, is there a way of legally trying to achieve the required objective?

If the document is putting in place something which “should have been done” but hasn’t been, usually for tax or similar reasons, then the position is straightforward.

There is no statute that explicitly outlaws backdating stock-option grants, but it seems virtually impossible to backdate options and achieve the ultimate goal of putting grants “in the money” without first deliberately falsifying documents and then covering up the sham.

At least that seems to be the conclusion reached by the Department of Justice and the Securities and Exchange Commission regarding their first case against executives charged with fraud related to backdating.

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In-the-money options are different from performance-based compensation in the eyes of the Internal Revenue Service and the Financial Accounting Standards Board.For example, if a seller had sold his house in December then the seller could have taken advantage of certain tax benefits.However, he only realizes this in January and so wishes to backdate the document to December.Cases of backdating employee stock options have drawn public and media attention.According to a study by Erik Lie, a finance professor at the University of Iowa, more than 2,000 companies used options backdating in some form to reward their senior executives between 19.

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