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Non-Tech : Executive Compensation

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From: Sam Citron	10/31/2006 2:33:02 AM
	of 18

Cramer on MadMoney recently seemed to suggest that options backdating is not such a big deal and offered as proof the fact that the stock prices of most of the companies that have been implicated have recovered from when the news hit. Cramer has a law degree and should know that the wheels of justice turn slowly. We are already seeing some CEOs quit or be forced out over this issue. Who is to say what the legal effect will ultimately be? As I stated earlier, I believe the options backdating scandal demonstrates an utter failure of corporate governance by the companies involved, and the legal and accounting consequences will take time to unravel and may be significant. Options backdating scandals are not devastating companies involved observes Cramer, but these stocks come back up after a temporary let-down. Brocade dipped from $8 to $4 during the scandal, but climbed back up to $5 and is now sitting at $8.64. CNET and BRCM also went up after a post-scandal downturn. Even UNH which Cramer said had "by far one of the worst backdating-option scandals" has also recovered. Investors could have used the scandal as an opportunity to buy some good stocks since "backdating options isn't something you do when business is bad." seekingalpha.com

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