Typically, the grant date of the stock options is the same as the date of the board meeting.This is important to note, because the grant date is what determines the exercise price on the options.You see, if you backdate stock options to a date when the price of the stock was lower, then the options are "in-the-money" when granted.
Law360, New York (June 15, 2006, AM EDT) -- It is virtually impossible to pick up a newspaper these days and not see an article about the ever-growing list of companies being caught up in investigations concerning allegations of backdated stock options.
Despite the attention paid to this issue, little has been written explaining why backdating options is problematic and potentially illegal.
This article will attempt to provide reasons why this issue is important, why civil and criminal authorities are investigating, and why it is critical that public companies who issued options over the past...
Those options give John the right but not the on the date of the grant.
The board formally grants the stock options to John every year at its January board meeting.