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Even with this added "protection," however, directors and officers may still be exposed to potential liability.

Whether or not stock option practices consistent with this type of low-risk plan evade examination depends largely upon the disclosures made in public filings and, thereby, to the company's stockholders.

Stock option backdating, of course, refers to the practice of publicly traded companies issuing stock option grants retroactively in order to coincide with low points in the company's stock price.

The goal behind such option practices is to boost the recipient's potential windfall.

But what factors are the courts considering when evaluating these derivative and class action complaints?In circumstances where directors approve, with input from trusted advisors, the granting of options without knowledge that they are being backdated in violation of a stockholder-approved stock option plan, any liability for breach of fiduciary duty remains suspect.This result is not unusual, especially in light of the fact that an astounding majority of corporations that are incorporated in jurisdictions permitting exculpatory charter provisions have included them.Law360, New York (June 15, 2006, AM EDT) -- It is virtually impossible to pick up a newspaper these days and not see an article about the ever-growing list of companies being caught up in investigations concerning allegations of backdated stock options.Despite the attention paid to this issue, little has been written explaining why backdating options is problematic and potentially illegal.

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