What is wrong with backdating stock options
The commonwealth-trained (and more prudent) approach would be to insert the date only when the last party has signed and to use a date no earler than the date of that last signature.
This should cover the majority of cases that come across corporate counsel’s desk.
In the US, however, there seems to be have been much more consideration of the issue (at least according to my Google search results).
Despite recent controversies surrounding the backdating of executive stock options, the general attitude in the US is that backdating is not wrong (or right), per se.
But you don't need an accounting to degree to know that backdating is wrong. Few tears were shed when William Mc Guire, CEO of United Health , was deposed for his role in backdating that company's stock options. Jobs' only sin, his defenders will say, was that he was an ignorant shmoe who didn't "appreciate the accounting implications" and didn't personally benefit from the scheme.1990) held that: “Illinois courts have, in the past, permitted the “relation back” theory of contract effectiveness: that is, contractual terms may be effective for a period before the contract is executed, so long as such coverage is clear from the face of the contract: In the law of contracts, it is elementary that ordinarily a contract speaks from the day of its date, regardless of when it was executed and delivered.It is of common occurrence in connection with deeds, leases and other contracts that, while they are not in effect at all and have no legal existence until delivered, yet, in respect to the date of delivery, they, in point of commencement, relate back or commence in the future.In the legal profession, information is the key to success.You have to know what’s happening with clients, competitors, practice areas, and industries.
Lawyers who were trained in commonwealth jurisdictions may have an ingrained concept that backdating a document is generally improper, if not illegal.