I'm not sure what I'm reading, are you saying backdating is not wrong?  Backdating itself is not wrong, granted.  However, consider this scenario, when you hire a VP of Sales on July 1, along with other non execs, when the stock price is $100. Then reviewing the stock prices, you realize it was only two weeks before when the stock price was $95, you re write history to make it appear that the VP was hired on June 15. The VP doesn't start work until 7/1! Does this hypothetical illustrate backdating?  Isn't this unethical? If anyone, the SEC goes back and looks at the grant data, this would stand out like a sore thumb. How is this not wrong?

Taeho.

Thanks for the response.

First, I must clarify that this posting is just one of the many tought provoking things I find on the internet each week. 

I neglected to also post the link to the source (from John Carney).  http://www.businessinsider.com/3-reasons-we-know-backdating-isnt-stealing-from-shareholders-2009-8

(There rest of the original posting is below my response)

Second,  I still cant determine if the original poster, John Carney, was attempting to be sarcastic.  I agre with you.  If 1) companies had been fully transparent about the process, AND 2) shareholders ahd not protested as it occurred, AND 3) accounting consequences were properly handled THEN backdating would not have been a problem.  Of course, I know of very few companies who did any of these three important tasks.

Whiel I truly believe that the majority of companies that had back-dated or other "privileged priced" options were not intentionally acting maliciously, the results were something taht created and unfair playing field.

REMAINDER OF ORIG POSTING

Hundreds of investigations, almost no prosecutions.
The SEC and the Justice Department went on the warpath against
backdating a couple of years ago. The investigations spanned hundreds
of companies and involved hundreds of executives. Only a tiny handful
were ever prosecuted, and most of them decided to settle before going
to trial. If widespread fraud were going on in backdating, the SEC and
the Justice Department would have been all too eager to prosecute the
miscreants. But the evidence just wasn't there.

So what the heck was going on if it wasn't fraud on investors?

Backdating was simply an accounting move that allowed companies to
issue "in the money" options without taking an accounting expense. If
they granted "in the money" options without backdating--something they
were entitled to do--they had to take a meaningless accounting expense
and possibly trigger additional taxes.

"Does it matter in the teensiest whether options are expensed? No,
expensing has no probative value whatsoever for evaluating a company's
shares or its compensation policies. Expensing creates a junk number,
of zero analytical value," Holman Jenkins explained in a column a
couple years ago.

Actually, backdating probably saved shareholders money by preserving cash. Companies that are short on cash use option to reward employees because employees irrationally over-value the options.