So you think backdating stock options is legit?

Check a new study which has found that hundreds of US company bosses inflated their pay by as much as 10 per cent by secretly backdating share options. Damn lucky, or just great timing!

The study Lucky CEOs by Lucien Bebchuck from Harvard Law School, Yaniv Grinstein from Cornell University and Urs Peyer from INSEAD found that backdating is no trivial issue.

"We estimate the average gain to CEOs from grants that were backdated to the lowest price of the month to exceed 20 per cent of the reported value of the grant and to increase the CEO's total reported compensation for the year by more than 10 per cent,'' the write.

The study looks at so-called "lucky grants", the kind that given at the lowest price of the month. The researchers estimate that 1150 lucky grants were manipulated and that 12 per cent of firms used manipulation to provide one or more of them during the examined period.

Worse still, 43 per cent of these grants were "super-lucky". They were given at the lowest price, not only of the month but also the quarter! And guess what? Most of them (62 per cent) were manipulated.

Companies more likely to engage in these sorts of practices didn't have a majority of independent directors and had chief executives who had been in there for a long time. Like any good pig at a trough.

Put all this in the context of more than 130 companies now under investigation by the Securities and Exchange Commission. At least 50 executives have lost their jobs as a result of the investigations, and five former executives have already been charged with fraud.

Apple Computer, McAfee, and jobs website Monster are now among the bunch of companies struggling to restate their financial results after discovering dodgy accounting for stock options dating back several years.