The articled linked in HN leaves out the actual basis of the indictment: http://www.justice.gov/usao/can/news/2010/2010_09_16_abrams.... ("In April 2002, her joint federal tax return for the tax year 2001 was filed with a Form W-2 that included a 2001 taxable income that was calculated in part on a number of her Mercury stock options being exercised on April 4, 2001. When her joint 2001 tax return was filed in April 2002, she knew that on April 4, 2001, she had not yet told Mercury what options she was exercising. She also knew that on April 4, 2001, there had not yet been a written action by the Mercury Board of Directors that formally approved the executive loan to pay for the options. Abrams was aware that Mercury’s Stock Option Plan required notice of exercise and payment before a stock option could be considered exercised. She also knew that on April 4, 2001, her stock option exercises had not met those requirements. By failing to meet the requirements of the Plan, Abrams endeavored to claim an exercise date on which the company’s stock price was lower than on later dates. This caused her to file a tax return and amended tax return that understated her wages and caused the IRS to assess an incorrect amount of tax for 2001, thereby obtaining a tax benefit for which she was not entitled.")

Basically, she said on her tax return that she had exercised her options on April 4, 2001, when not only had she not done that, but she hadn't yet met the requirements for being able to exercise her options at that time. This is not being burned by some esoteric rule where she checked Box A when she should've checked Box B. She filed a tax return that said something happened on a certain date that not only didn't happen on that date, but couldn't happen on that date.

That's why Horowitz's premise is false. He wouldn't have gone to jail for implementing the same backdating scheme. Tons of companies did it, very few went to jail, and those who did went to jail because they let the backdating fiction cause them to either lie on their tax returns or commit affirmative fraud on investors.

Also: to make a more general point--companies are entitled to compensate executives in whatever manner the shareholders will tolerate, but public companies aren't entitled to be deceptive about it. That was the problem with backdating: while the process itself was legal from an accounting standpoint, the fact that it was built on a fiction made it easy to cross the line into outright deception. The wikipedia article actually has a great sentence that captures the whole situation: http://en.wikipedia.org/wiki/Options_backdating ("To be legal, backdating must be clearly communicated to the company shareholders, properly reflected in earnings, and properly reflected in tax calculations.")