backdate

verb
back·​date | \ ˈbak-ˌdāt How to pronounce backdate (audio) \
backdated; backdating; backdates

Definition of backdate

transitive verb

: to put a date earlier than the actual one on backdate a memo also : to make retroactive backdate pension rights

Examples of backdate in a Sentence

an increase in salary backdated to the beginning of the year
Recent Examples on the Web At least 19 more were created after dos Santos was fired and seemingly backdated to look like they were made beforehand. Max De Haldevang, Quartz Africa, "How Africa’s richest woman bought her way out of scrutiny from Western banks," 19 Jan. 2020 The other four defendants helped Garmo by participating in the straw purchases, backdating paperwork to avoid the 10-day waiting requirement and helping Garmo's customers obtain expedited weapons permits through illicit cash payments. Sarah Moon And Ralph Ellis, CNN, "Former San Diego County sheriff's deputy, four others charged with illegal gun trafficking," 22 Nov. 2019 Blatter is serving a six-year FIFA ban, upheld by CAS, for authorizing a $2-million payment to Platini in 2011 as backdated salary for work as his adviser a decade earlier. San Diego Union-Tribune, "Platini plans comeback, legal fight after 4-year FIFA ban," 7 Oct. 2019 After the Polk County forum, Mancuso talked with one foster father, who said the case worker responsible for his family had missed several meetings, arrived unprepared at another appointment and asked him twice to backdate paperwork. oregonlive, "Foster care supervisor who drew criticism, lawsuits continues long career at DHS after internal investigation," 30 Nov. 2019 Also at Pugh’s urging, prosecutors say, Brown created bogus invoices and backdated them. Kevin Rector, baltimoresun.com, "Former Baltimore Mayor Pugh charged with 11 counts of fraud, tax evasion in ‘Healthy Holly’ book scandal," 20 Nov. 2019 Athletes can only be punished for racking up three failures in a 12-month period, and the World Anti-Doping Agency said one should be backdated to fall outside that period. BostonGlobe.com, "Puerto Rico advances to second round of basketball World Cup," 4 Sep. 2019 Zimmerman’s unlucky love streak backdates his recent ban from Tinder. oregonlive, "Bumble, Tinder refuse to let George Zimmerman use dating apps," 19 Apr. 2019 The batsman has been banned for eight months by India's Board of Control for Cricket (BCCI) -- backdated to March 16. James Masters, CNN, "Prithvi Shaw banned from cricket after doping violation," 30 July 2019

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'backdate.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

See More

First Known Use of backdate

1822, in the meaning defined above

Keep scrolling for more

Learn More about backdate

Time Traveler for backdate

Time Traveler

The first known use of backdate was in 1822

See more words from the same year

Statistics for backdate

Last Updated

18 Feb 2020

Cite this Entry

“Backdate.” Merriam-Webster.com Dictionary, Merriam-Webster, https://www.merriam-webster.com/dictionary/backdate. Accessed 24 Feb. 2020.

Keep scrolling for more

More Definitions for backdate

backdate

verb

Financial Definition of backdate

What It Is

In the finance world, backdating usually refers to the practice of changing the dates of option grants to one that is earlier than the actual grant date in order to place a lower exercise price on the options and thus enhance the potential profits from the exercise of those stock options.

The practice sometimes also occurs in the insurance industry, whereby policy issuers make the effective date of a policy (or claim) earlier than the application date in order to obtain a lower premium for the customer (or obtain better claim results).

How It Works

For example, let's assume that John Doe is the CEO of Company XYZ. When he was hired, the Company XYZ board of directors offered John an attractive salary as well as an annual grant of 1,000 Company XYZ stock options. Those options give John the right but not the obligation to purchase 1,000 shares of Company XYZ stock at the market price on the date of the grant. The board formally grants the stock options to John every year at its January board meeting.

Typically, the grant date of the stock options is the same as the date of the board meeting. This is important to note, because the grant date is what determines the exercise price on the options. For instance, if the board meeting is on January 3, 2012, and Company XYZ stock closes at $45 per share that day, then the exercise price of John's 2012 stock option grant is $45 per share. That is, he has the right but not the obligation to purchase 1,000 shares of Company XYZ stock for $45 per share.

If, however, Company XYZ decides to backdate the options, it could change the paperwork to state that it actually granted those stock options to John on, say, June 15, 2008, when the stock was only trading at $15 per share. This would mean that John's 2012 stock option grant would have an exercise price of $15 per share instead of $45 per share.

Let's say that John now decides to exercise his stock options. On the day he decides to exercise his options, Company XYZ shares are trading at $50. Under normal circumstances, he pays the $45 per share exercise price and can turn around and sell those shares on the exchange for $50 each, netting a profit of $5 per share, or $5,000 total.

But if John's options are backdated, then his exercise price is only $15 per share. He pays the $15 per share exercise price and can turn around and sell those shares on the exchange for $50 each, netting a profit of $35 per share, or $35,000.

Why It Matters

Granting stock options to employees is a generally accepted and perfectly legal form of compensating employees. Backdating the options is not. Critics of backdating argue that the practice is difficult to detect and thus encourages boards and executives to use it to synthesize more creative compensation packages.

In our example, backdating the options is the same as giving John Doe a check for $35,000 -- without recording that $35,000 on the income statement as compensation. That, in turn, understates the company's expenses and overstates its profits, which is a violation of generally accepted accounting principles and has been the grounds for a variety of fraud and miscellaneous charges from federal, state and local regulators. As a result, regulations in the Sarbanes-Oxley Act require companies to report option grants to the Securities and Exchange Commission within two business days.

In addition to being illegal, backdating isn't always a sure thing. The general reason companies backdate options is to create a lower exercise price, which in turn increases the probability that exercising the options will make more money for the optionee. Stock prices change, however, and there is no guarantee that any stock price will ever be above the exercise price.

Source: Investing Answers

backdate

verb
How to pronounce backdate (audio)

English Language Learners Definition of backdate

: to give (something) an earlier date than the actual date
: to say that something began or became effective at a date earlier than the current date

More from Merriam-Webster on backdate

Rhyming Dictionary: Words that rhyme with backdate

Comments on backdate

What made you want to look up backdate? Please tell us where you read or heard it (including the quote, if possible).

WORD OF THE DAY

See Definitions and Examples »

Get Word of the Day daily email!

Test Your Vocabulary

More Confusing Words—Quiz

  • cats on impossible timber
  • The magician ______ moved the selected card to the top of the deck.
Spell It

Can you spell these 10 commonly misspelled words?

TAKE THE QUIZ
Citation

Test Your Knowledge - and learn some interesting things along the way.

TAKE THE QUIZ
Love words? Need even more definitions?

Subscribe to America's largest dictionary and get thousands more definitions and advanced search—ad free!