In comparison, had the options been granted at the year-end price when the decision to grant to options actually might have been made, the year-end intrinsic value would have been zero.
For several years, Micrel allowed its employees to choose the lowest price for the stock within 30 days of receiving the options.
After these stock option terms came to the attention of the IRS in 2002, it worked out a secret deal with Micrel that would allow Micrel to escape $51 million in taxes and required the IRS to keep quiet about the option terms.
This made me think about the possibility that some of the grants had been backdated.
I further found that the overall stock market performed worse than what is normal immediately before the grants and better than what is normal immediately after the grants.
Remy Welling, a senior auditor at the IRS, was asked to sign the deal in late 2002.