Backdating stock options wikipedia

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For example, International Widget may issue an option to a key employee, which will allow the employee to purchase one hundred shares of stock at the fair market value at the grant date.The employee has five years in which to exercise that option.a right to purchase property or require another to perform upon agreed-upon terms.An option is paid for as part of a contract, but must be "exercised" in order for the property to be purchased or the performance of the other party to be required.The prohibition is based on the concept that everyone has the privilege of choosing with whom to contract.Once an offer has ripened into a contract, however, the rights thereby created are usually assignable.

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Therefore, no assignment—a transfer to another of any property—of an offer can be made.

An option contract is interpreted strictly in favor of its creator and must be unequivocal and in accordance with the terms of the option.

It is frequently said that "time is of the essence" in an option contract, but this means only that the option cannot be exercised after the offer has lapsed.

The offer is irrevocable for the stated period of time.

Like most other contracts, the option contract is not terminated by the sub-sequent death or insanity of either party. The seller can state to the purchaser, "If you pay me 0 today, I promise to sell Whiteacre to you for ,000 on the condition that you pay the ,000 within sixty days." If the purchaser pays the 0, a unilateral contract—an agreement in which there is a promise on only one side and a possibility of a performance by the other side—is created, and the offer is irrevocable.

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