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Hamilton’s dismissal of the charges against Shanahan Jr. In December, a federal judge tossed out criminal and civil charges against Broadcom Corp co-founder Henry Nicholas and former chief financial officer William Ruehle.Shanahan’s father, Michael Shanahan Sr., the former chief executive and co-founder of Engineered Support Systems, settled last month with the SEC and agreed to pay a 0,000 penalty.If, however, Company XYZ decides to backdate the options, it could change the paperwork to state that it actually granted those stock options to John on, say, June 15, 2008, when the stock was only trading at per share.This would mean that John's 2012 stock option grant would have an exercise price of per share instead of per share.In our example, backdating the options is the same as giving John Doe a check for ,000 -- without recording that ,000 on the income statement as compensation.
The board formally grants the stock options to John every year at its January board meeting.Under normal circumstances, he pays the per share exercise price and can turn around and sell those shares on the exchange for each, netting a profit of per share, or ,000 total.But if John's options are backdated, then his exercise price is only per share.Some regulators argue manipulating option dates can be a valuable business tool, helping companies that have more promise than profits afford more talented employees. But for Marketplace to continue to grow, we need additional investment from those who care most about what we do: superfans like you.WASHINGTON (Reuters) - A federal judge on Friday dismissed options-backdating charges against the son of the former CEO of Engineered Support Systems, a defense contractor. “We were able to prove what we’ve said all along: that the government never had a case.” John Nester, a spokesman for the SEC, said the agency “will determine how best to proceed once the court issues its written decision.” Hamilton issued her ruling from the bench on the 10th day of trial, taking the case out of the hands of the jury.