The practice sometimes also occurs in the insurance industry, whereby policy issuers make the effective date of a policy (or claim) earlier than the application date in order to obtain a lower premium for the customer (or obtain better claim results).For example, let's assume that John Doe is the CEO of Company XYZ.
In the context of mutual funds, a feature allowing fundholders to use an earlier date on a letter of intent to invest in a mutual fund in exchange for a reduced sales charge, e.g.
Giving retroactive value to purchases from the earlier date.
But if John's options are backdated, then his exercise price is only $15 per share.
He pays the $15 per share exercise price and can turn around and sell those shares on the exchange for $50 each, netting a profit of $35 per share, or $35,000.
However, it can be permissible under certain circumstances.
For instance, one may backdate an insurance claim if there was an unavoidable delay between the date the insured event occurred and the day the claim was made.
For example, if one signs a contract on February 1, one may backdate it to January 31.
Backdating is usually illegal; for example, one may use backdating to evade taxes.
a document for the purposes of recording an earlier oral agreement, it should nevertheless still be drafted in such a way so as to avoid giving the incorrect impression that it was actually signed on the date stated.
These example sentences are selected automatically from various online news sources to reflect current usage of the word 'backdate.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. In the finance world, backdating usually refers to the practice of changing the dates of option grants to one that is earlier than the actual grant date in order to place a lower exercise price on the options and thus enhance the potential profits from the exercise of those stock options.
On the day he decides to exercise his options, Company XYZ shares are trading at .Tags: Adult Dating, affair dating, sex dating