The act of dating a document before the date it was actually signed.
Backdating does not violate shareholder-approved option plans.
Most shareholder approved option plans prohibit in-the-money option grants (and thus, backdating to create in-the-money grants) by requiring that option exercise prices must be no less than the fair market value of the stock on the date when the grant decision is made. For example, because backdating is used to choose a grant date with a lower price than on the actual decision date, the options are effectively in-the-money on the decision date, and the reported earnings should be reduced for the fiscal year of the grant.
Because the option value is higher if the exercise price is lower, executives prefer to be granted options when the stock price is at its lowest.