Backdating means that the company awards its employees stock options on a date when its share price was low.Due to this the stock options of the employees become more valuable.Backdating can lead to overstating of earnings by a company.
Both the Companies have adopted the Statement of financial accounting standards No. This standard requires the measurement and recognition of compensation expense for all share based payment awards made to employees and directors including employee stock options and employee stock purchases based on estimated fair value.
In 2006 Juniper had to restate its past financial results after an internal audit found problems with the way the company accounted for the stock options grants.
The investigation concluded that the recorded grant dates of certain stock-options differed from the actual measurement dates that should have been used for the accounting purposes.
The company had indulged in backdating of stock options that were not accounted properly.
This left a balance of 569.23 million shares as of the end of December 2006.
In view of this, Cisco Systems reviewed its stock options practices and found no problems with it.
Cisco had adopted the SFAS123(R) as on July 31, 2005.
They recorded approximately 0 million charge as a result of the improprieties in its stock option granting practices. Its restated balance for common stock shares at December 2005 was 568.24 million.
During the year 2006 in connection with employee stock purchase plan, the company issued 1.74 million shares.
Stock options exercised by the employees were 9.31 million shares.
The company repurchased and retired 10.07 million shares.