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COPYRIGHT 2006 All rights reserved. Reproduced by permission of The Condé Nast Publications Inc.
Scandals move in unpredictable ways. When news broke, earlier this year, that some companies had backdated stock-option grants to employees in order to make them more valuable, it seemed like a problem that would come and go quickly: the number of companies thought to be involved was small and the impact fairly trivial. But the scandal has metastasized, engulfing more than a hundred companies, sparking criminal indictments, and forcing the departure of high-profile executives, including, just two weeks ago, William McGuire, the venerated chief of the health-care giant United Health Group. Accounting scandals are nothing new. What's distinctive about this one is that the benefits companies got from backdating were so small. Never, you might say, have so many cheated so much to gain so little.
The most common stock...
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