Backdating refers to: A. choosing the grant date of a stock option retroactively. B. choosing the exercise date of the stock option retroactively. C. choosing the strike price of a stock option retroactively. D. choosing the share conversion ratio retroactively.

A. choosing the grant date of a stock option retroactively

Explanation:

Stock options are the priviledge that an individual has to purchase a stock at a particular time and date.

Usually it is given to those that already have shared.

Companies give this priviledge to existing shareholders to reduce stock dilution.

Backdating of stock options means that the options grant date can be altered to a time when the option price was lower.

In effect those that practice this get stock at lower prices and make more profit per share.

The grant date is chosen retroactively

A. choosing the grant date of a stock option retroactively.

Explanation:

First of all, backdating is usually illegal and sadly, many companies do it to boost employee compensation. This is an example of agency conflicts since management puts their interests ahead of the interests of stockholders.

Backdating refers to retroactively setting the date of a contract in order to benefit one party. If management had done things properly, why would they need to backdate a compensation plan?

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