That's what Eliezer Fich, finance professor at Drexel, says of the practice of some companies to issue stock options to the top people just prior to the announcement of a merger. The professor and his colleagues studied mergers and acquisitions made between 1999 and 2006 and found 110 cases where, the professor claims, management was given unscheduled stock options while discussions were taking place but the public had no knowledge of such discussions. The study concluded that these companies got less of a premium from the acquirer, while the CEO averaged $5,700,000 in extra compensation via these options.
Granted it's an academic study that has yet to be published. But one should remember the furor about backdating options that was started by another WSJ article. Plus, the Journal has given some form of imprimatur by saying that it has reviewed a number of company filings and agrees with the professors.
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