Business ethics solutions are merely suggestions of points to address. Please be descriptive. 

1. Stock options, in theory, are used to create incentives for the firm’s executives to increase operating performance. The practice of backdating options defeats this purpose. The point of backdating options is to avoid issuing ‘in the money’ stock options which would have had both accounting and tax consequences not favorable to the firm. Backdating avoids accounting recognition. 

2. Executives always have the right not to exercise options if they feel that there is an ethical issue. However, if the proper disclosures are followed (which is rarely the case), then back-dating options is not illegal under current laws.

Answer rating: 100% (QA)

Stock options are provided for a firms executives usually top management executives as a return of t... View the full answer