Dead executive gets stock options

Cablevision made the admission in an SEC filing

Cable TV firm Cablevision has admitted breaking US accounting regulations by giving stock options to a dead man.

The firm is the latest in a long line of US companies to be caught up in a probe into the misuse of stock options.

It awarded the options to the deceased man after his 1999 death and backdated them to give the illusion they were granted when he was still alive.

It has also said that it gave stock options to a former compensation consultant whom it no longer employed.

Money in the bank

During the dotcom boom in the late 1990s and early 2000s, stock options were often used as a way to financially entice - and retain - employees.

Stock options are a way of paying executives by giving them the right to buy shares at a later date at a fixed price - options are valuable because the fixed price is usual less than the market rate for the firm's shares.

Backdating share options means that they can be exercised almost immediately and prices can often be fixed at an even lower rate.

While backdating is not illegal, it must be properly and clearly accounted for because if not then it could give misleading profit figures or underpaid taxes.

Federal investigators have said they will prosecute companies and individuals if the backdated options breached accounting rules.

Cablevision's admissions came in a regulatory filing the company made to the US Securities and Exchange Commission.

In the filing, Cablevision, which owns the New York Knicks basketball team and Madison Square Garden, said that its financial statements for 2003, 2004 and 2005 should be restated as a result.

More than 80 US firms, including Apple Computer, Brocade Communications and Comverse Technology are either examining their option schemes internally or undergoing government investigations.