Stock backdating definition

The Canadian Market Portfolio Index (XXM) tracks the market performance of the 25 highest capitalized stocks traded on...

The process of granting an option that is dated prior to the date that the company granted that option.

Under most circumstances, backdating is seen as fraudulent and illegal, although there are some situations in which backdating can be used in a legal and beneficial way, such as backdating a claim for a past period.

Sometimes certain claims (such as insurance claims) can be backdated if the could not be completed at an earlier date, although there must be good reason for neglecting to claim in advance.

This is a way of repricing options to make them valuable or more valuable when the option "strike price" (the fixed price at which the owner of the option can purchase stock) is fixed to the stock price at the date the option was granted.

Cases of backdating employee stock options have drawn public and media attention.

For instance, one may backdate an insurance claim if there was an unavoidable delay between the date the insured event occurred and the day the claim was made.

However, it can be permissible under certain circumstances.

In essence, the revision enabled companies to increase executive compensation without informing their shareholders if the compensation was in the form of stock options contracts that would only become valuable if the underlying stock price were to increase at a later time.

Montreal Exchange/Bourse de Montreal The oldest stock exchange in Canada trading stocks, bonds, futures, and options.

If your backdated claim is approved, you will be able to receive benefits from a certain date in the past.

Options backdating is the practice of altering the date a stock option was granted, to a usually earlier (but sometimes later) date at which the underlying stock price was lower.


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