some business executives have profited handsomely from the practice of earning “springloaded” stock options that take advantage of information not available to the public but us regulators on monday announced plans to put a stop to it the securities and exchange commission issued new guidance for companies on how to reflect the potential value of springloaded options when they disclose how much top executives actually earn springloaded awards are a type of compensation in which a company grants stock options shortly before it announces marketmoving information such as an strongerthanexpected earnings release or disclosure of important transactions the options have the potential to soar in value once the news is made public the practice came to the public’s attention in july 2020 when a sudden surge in the stock price of eastman kodak kodk transformed option given to its top executives into potentially millions of dollars in profits the options were granted just a day before the company announced it had received a large federal loan the unusual timing of the option awards spurred sen elizabeth warren of massachusetts to ask the sec to investigate whether any laws were broken kodak has not been charged with any violations under new sec guidance nonroutine springloaded options “merit particular scrutiny” from the corporate officers responsible for making sure their companies comply with financial disclosure rules “it’s important that companies’ accounting and disclosures reflect the economics and terms of these compensation arrangements” sec chairman gary gensler said in a press release “this gets to the sec’s remit to protect investors” in kodak’s case ceo jim continenza could have earned more than 95 million had he exercised and sold his options at the peak of kodak’s rise the wall street journal reported last year more recently an investor in roku roku sued the company in august after claiming company insiders issued cheap stock options to themselves in the leadup to a 2019 earnings report that drove the company’s stock price up 35 bloomberg law reported