Options backdating - express yo'self!

So it is against the law, right?

What I'm not sure about is how it affects the average investor. By granting options at lower than market value, does it somehow devalue Joe Blow's 100 shares? I don't know enough about securities to wrap my head around it.

my understanding is that they are against the law if not disclosed to shareholders, in earnings and tax documents.  If fully disclosed and accounted for, it's legal.

Options (backdated or otherwise) typically dilute the assets/value-per-share because the company issues new shares for the options.  If I own 100 shares of JB and others hold 900, my shares represent 10% of the value of the company.  If JB gives options for 100 shares to the CEO (and issues those shares right away), my portion is 100/1100 (9.09%, not 10%).  Unless the CEO can increase the value of the shares (for everyone) I lose money in the process.  If JB makes enough money that I'm still ahead in the game, I'm probably reasonably happy (but, obviously, not as happy as CEO, who just got alot more in the deal). 

Backdating isn't illegal, and I might accept the dilution if I'm happy with the performance so far.  It is (usually) great for the person receiving the backdated options, because they show a paper-gain the day they get the backdated options.  The legality comes from not disclosing this for what it is...giving the CEO additional "compensation."  The board could just as easily give the options at a discount, but then would have to justify why they picked the amount of the discount (which they don't want to do)...so...they backdate the option to a date when the price reflected the discount, quietly release the required paperwork, and hope people don't notice or just assume that this represents finally getting around to finishing the paperwork for something that was done a while ago...

But backdating the options wouldn't dilute the value/share anymore than un-backdated options then, right?

Should this say "... dilute the assets/value-per-share IF the company isseus new shares to cover the options.."?  Are new shares usually issued to cover the options, or are the options written aagainst shares that are already issued but merely held by the company?

dilution occurs

Frankly, I'm sick and tired of hearing about it.  My company, UnitedHealth Group, is in the middle of the mire and the Joe Blow employee shareholders are suffering as a result.  I, personally, don't need to excercise my options or get access to my stock purchase program shares but that's not the case for everyone.  Until the company restates/updates/revises their SEC filings, we're stuck.  Think the company will pay us interest while they hold our money?