BACK TO THE FUTURE: The Delaware Court of Chancery's Decisions on Stock Option Backdating

Conventional wisdom attributes to Albert Einstein the cogent quip that the concept of time was created in order to ensure that everything wouldn’t happen at once. An elegant antidote to temporal chaos to be sure, but one that carries with it the ancillary principle that events also cannot be said to have occurred in the past and in the present simultaneously. It is this intractable truism that the Delaware Court of Chancery obliquely confronted in considering a series of recent challenges to the validity of stock options alleged by stockholders to have been backdated at the time of their issuance to corporate management in an effort to invoke the advantages of hindsight in order to maximize the value of those options to the recipients retrospectively.

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