The options backdating

Unfortunately, these conditions are rarely met, making backdating of grants illegal in most cases.

A particularly interesting example is that of Micrel Inc.

Further, at-the-money options are considered performance-based compensation, and can therefore be deducted for tax purposes even if executives are paid in excess of $1 million (see Section 162(m) of the Internal Revenue Code).

However, if the options were effectively in-the-money on the decision date, they might not qualify for such tax deductions.

The Wall Street Journal (see discussion of article below) pointed out a CEO option grant dated October 1998.