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University of Iowa News Release


April 16, 2007

Lie, UI Officials Congratulate Wall Street Journal Reporters For Pulitzer Prize

University of Iowa finance professor Erik Lie congratulated Wall Street Journal reporters Charles Forelle and James Bandler for the Pulitzer Prize for public service reporting they were awarded today and said he was grateful his research into stock options backdating helped them break the story.

"The Pulitzer Prize is journalism's top award, and I congratulate Charles and James for their win," said Lie, associate professor and Henry B. Tippie Research Fellow in the Tippie College of Business. "I saw firsthand how hard they worked at reporting and writing this important story and they deserve all the accolades they receive."

Forelle and Bandler, along with Journal reporters Mark Maremont and Steve Stecklow, were honored by the Pulitzer committee for their story, "Perfect Payday," which exposed the widespread practice of secretly backdating stock options grants to benefit corporate insiders. The first article was published in the Journal in March 2006 and subsequent reporting has found additional examples of potentially illegal backdating.

The series was based on material provided to the Journal by Lie, who had studied the questionable timing of stock options grants for several years. Lie began researching stock options in 2002 and soon noticed that many executives were consistently granted options on days when their companies' stock was at its lowest price. The research suggested the options were backdated without being disclosed to the public, an act that violates federal securities law. He published his first backdating research article in an academic journal in 2004 and later met with Forelle and Bandler to discuss his research, in December 2005.

"I'm very pleased they were able to use my research as a guide for their reporting and that I was able to help bring this major story to the public's attention on the pages of the Wall Street Journal," said Lie.

Federal regulators have responded to Lie's research and the Journal's reporting by investigating dozens of companies that may have given illegally backdated stock options to executives. Companies such as Apple Computer, Research in Motion, United Health Care, Brocade and McAfee are being investigated, and numerous executives have stepped down as a result.

In addition, many companies are being sued by stockholders for losses incurred by the alleged backdating.

The Journal continues to cover the backdating issue and regularly breaks new stories, though Lie is no longer involved with the reporting. The stories have won numerous other awards in addition to the Pulitzer, including a George Polk Award, Phillip Meyer Award, and a National Journalism Award from the Scripps Howard Foundation, and was named a finalist for the Michael Kelly Award from the Atlantic Monthly.

Lie's continuing research has shown that more than 2,000 companies may have offered backdated stock options to executives in violation of federal law.

Other University of Iowa leaders also offered congratulations for the Wall Street Journal reporters and for Lie.

"I congratulate Erik Lie and the Journal reporters for this series that brought to light activities that could cost companies and their shareholders hundreds of millions of dollars or more," said Gary Fethke, interim UI president who was dean of the Tippie College of Business when Lie first published his research. "This is an outstanding example of the kind of research we do best here at the University of Iowa, work that combines excellent scholarship with real-world applications."

Curt Hunter, dean of the Tippie College of Business, said Lie's work reflects the college's commitment to producing research that informs managerial and regulatory practice and helps students confront and deal with ethical dilemmas in an honest and straight forward manner.

"One of the most important parts of our mission at the Tippie College of Business is to produce future business leaders who place a priority on ethical and legal decision making," said Hunter. "By helping to expose managerial practices that appear to lack such values, Erik Lie is leading by example and is a wonderful role model for our students."

Lie and his wife, Heidi, also an instructor at the Tippie College of Business, live in Iowa City with their two children.

STORY SOURCE: University of Iowa News Service, 300 Plaza Centre One, Suite 371, Iowa City, Iowa 52242-2500.

MEDIA CONTACT: Tom Snee, 319-384-0010,