By: Cydney Posner

There is an article from the WSJ today highlighting the actions by a number of firms to grant large executive option packages in the immediate aftermath of the 9/11 tragedy. The article discusses an analysis of 1,800 companies performed by the WSJ (which, you may recall fueled the option backdating controversy initially), demonstrating that 186 companies granted options to executives in the few weeks after 9/11, of which 91 did not regularly grant options in September, resulting in anomalous special low-priced grants. Although the article does not characterize the practice as illegal, it does ask whether these companies were taking "unseemly advantage of a national tragedy." In a rather painful discussion, the article points out that several of these companies suffered employee deaths and dislocations as a result of the 9/11 attacks, but nevertheless managed to make executive grants in embarrassingly close proximity to the tragedy. The article also implies that, in a number of instances, the "patriotic tone" emanating from the business community in the immediate aftermath of the attack was perhaps tinged with hypocrisy, as executives of these businesses capitalized on the low stock prices for personal benefit. Although the article does indicate that, in a number of cases, the stock prices declined further, leaving the grants underwater, the authors' point is not lost that "acting so quickly after a national tragedy drove down stocks shows the eagerness of some companies to increase their executives' potential wealth."

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