SEC Member Backs ‘Well-Timed’ Options

Companies that build in a profit for executives on stock options by making grants ahead of good news aren’t guilty of insider trading, Securities and Exchange Commission member Paul Atkins said Thursday.

Atkins said such maneuvers -- which some federal officials say might be criminal fraud -- were good for shareholders because directors could issue fewer options to reward executives knowing that the price would rise, and then could pay lower salaries.

“It is cheaper to pay a person with well-timed options than with cash,” Atkins said during a speech at a corporate governance forum in Washington. He said timing the grants gave companies “the biggest bang for the buck.”

More than 60 companies have disclosed probes, including 40 grand jury investigations, into whether options were timed to coincide with days when prices were low.