If McGuire et al got backdated options at below market prices...a portion of those options should be taxable income. If this happened over a number of years...and they didn't declare it...they got a big tax bill due (not to mention those pesky legal issues). Could a penalty go as high as 8 digits? Jail time?
Congratulations you have it exactly backwards. IF they backdated options to acheive a lower strike price then they actually paid more taxes when they exercised not less Furthermore only those options that were exercised as there is no taxable event to the individual before the option is exercised. So it is likely they paid too much tax IF they backdated.