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March 18, 2010
LOS ANGELES (AP) — A former executive of KB Home testified Tuesday against former chairman and Chief Executive Bruce E. Karatz, who is accused of bilking shareholders out of millions of dollars by illegally backdating stock options.
A stock option allows an employee to purchase the company's stock at a preset price at a future date. If the shares are trading above that price, the employee can then sell the shares and pocket the profit. The perk is designed to encourage employee performance that contributes to the company's financial success.
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