The Shady Tree Company is preparing to announce their quarterly earnings numbers. The company expects to beat the analysts' forecast of earnings by at least 5 cents a share. In anticipation of the increase in stock value and before the release of the earnings numbers, the company issued stock options to the top executives in the firm, with the option price equal to today's market price.
1. This type of executive stock option is often referred to as "spring-loading." Do you think this practice should be allowed? Does it provide information about the integrity of the firm or is this just good business practice?
2. Do you think this practice violates the insider trading rules?

  • CreatedMarch 13, 2015
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