Idiocy isn’t illegal
by Miki SaxonImage credit: bluegum CC license
One of the things that RampUp does for its startup clients is help implement our unique approach to awarding stock options. The original methodology was conceived by RampUp’s angel Al Negrin for his own startups and we’re currently in the process of turning the consulting service into a software program called Option Sanity™.
Among all the neat things that Option Sanity™ does is track award dates and provide an audit trail that discourages backdating.
It also provides the intelligence necessary to avoid the level of idiocy present in TeleTech Holdings’ restatement of 12 years’ worth of financials dating back to 1996.
Yup, 12 years of misdated stock options, but no misconduct!
“If we eliminate misconduct, we find ourselves in the land of cluelessness, sloppiness and ineptitude… There were other goofy mistakes, like recording option grants for folks who were no longer on the payroll…And the firm’s options accounting treated some consultants like employees.
As in many of these options messes, the compensation committee’s use of “unanimous written consents” instead of real meetings (and befuddlement over who had authority to make grants) led to massive confusion about the dates on which options were officially granted. The investigators had to reconstruct the circumstances behind every grant to figure out the “appropriate” date (and hence the real exercise price) for each one. The company admits that some dates “could not be determined with certainty.”
All of which goes to prove Hanlon’s Razor: Never attribute to malice that which can be adequately explained by stupidity.
What do you think?
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