backdate

verb back·date \ ˈbak-ˌdāt \

|Updated on: 3 Jul 2018

Examples: backdate in a Sentence

Definition of backdate

backdated; backdating; backdates

transitive verb

: to put a date earlier than the actual one on

backdate a memo

; also : to make retroactive

backdate pension rights

See backdate defined for English-language learners

Examples of backdate in a Sentence

an increase in salary backdated to the beginning of the year

Recent Examples of backdate from the Web

His 10-day stint on the disabled list was backdated to his last start.

— james wagner, New York Times, "The Mets’ Finger Casualties: First Noah Syndergaard, Then Steven Matz," 29 May 2018
By order of the secretary of the Army, the promotion was backdated to May 1946, according to the proclamation read at the ceremony.

— bryan marquard, BostonGlobe.com, "‘He came home and lived his life to the fullest.’ Mass. man who survived Bataan Death March dies at 99," 15 May 2018
The measure, as currently written, is backdated to the beginning of Trump’s term, Jan. 20, 2017.

— warren richey, The Christian Science Monitor, "Can Trump counter Mueller by handing out pardons?," 24 Apr. 2018
The agreement includes a 3 percent raise effective Oct. 1, 2018 and a further 2.1 percent increase a year later, as well as a one-time payment of 250 euros backdated to April 1.

— Bloomberg.com, "German Airports Targeted in Widening Public Workers' Strikes," 23 Apr. 2018
The current pay deal expired at the end of March and any increases will be backdated.

— michael cohen, Bloomberg.com, "Public Wages Impasse Puts South Africa's Ramaphosa in a Bind," 23 Apr. 2018
Sheryl Klinkel, said the approval was backdated to June 7, before the Niger ambush, because that is when Africa Command initially requested it.

— dan lamothe, Washington Post, "Pentagon adds Niger, Mali and parts of Cameroon to areas where U.S. troops receive imminent danger pay," 8 Mar. 2018
If that is the case, and given that a ban would be backdated to the date of the positive test, a September showdown with Golovkin would still be a viable option.

— martin rogers, USA TODAY, "Canelo Alvarez withdraws from rematch with Gennady Golovkin after failed drug tests," 3 Apr. 2018
She was convicted of a misdemeanor for backdating her son’s candidacy paperwork for a state House seat, then later impeached by the House and removed by the state Supreme Court.

— Washington Post, "Greitens blames politics, but even some in GOP concerned," 7 Mar. 2018

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.

First Known Use of backdate

1822

in the meaning defined above

See Words from the same year

NEW! Time Traveler

Financial Definition of BACKDATE

backdate

verb

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