The Guardian has reported the latest person to reason in the corporate scandal sweeping across America where it has been discovered that maybe hundreds of companies have been backdating stock options for their staff so that they could cash them in at greater worth, usually tax free. As they reported:
Bruce Karatz, 61, quit [on Monday] after 34 years as chief executive of KB Home, where he earned $155m (£81.5m) last year, making him America's second highest paid corporate boss. An investigation by the company established that he improperly set the trigger dates for his own share options, enabling him to reap huge rewards. He has agreed to pay back $13m.
This scandal shows that greed is alive and well and living in the corporate world. It's curious that the Guardian notes that the standard excuse offered for backdating options has been 'everyone else is doing it'. People say that of tax avoidance in general. That also usually relies on dodgy documents and just a hint of artificiality to work. Wise people do neither, not if they want to stay the right side of the law.
Mr Karatz and those like him are no loss to the corporate world. I now hope he is pursued for his misdemeanours. Examples need to be made of such people.
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Everyday, I read more stories about backdating stock options. William Mcguire from United Health is mentioned in most articles .
However, the most egrigous stock options abuser is Terry Semel CEO of Yahoo!. I have done the research, which anyone can do with the time and the will. I know of what I speak.
But what amases me is the fact that no news reporters will touch him. Is there a reason?
Tax avoidance for me is far removed from this type of behaviour. Back dating of options is fraudulent. Tax avoidance is not. It si often just structuring atransaction to avoid complecx tax rules that have missed their intended target.
To suggest tax avoidance is fraudulent is a moral judgement it is not legally correct.
The comment fro John Olaques noted above ha been allowed, not because I have checked the veracity of the claim made (I have not) but so that others might do so. For that reason I stress that Tax Research LLP passes no comment on the claim made.
David
You’re living in that fantasy world where there is a clear black line, one side of which is evasion and the other side of which is avoidance.
There’s only one problem with fantasy. It’s not real. And nor is that line.
That’s not a moral judgement. That’s fact. Those who undetrake tax avoidance risk crossing that line every day as they have no idea where it is. That’s the point I’m making. And as a tax practitioner I know what I am saying is true.
The only way I can avoid that risk is by practicing tax compliance. And that’s something quite different from tax avoidance.
Richard