On an October day in 1999, the shares of the giant insurer United Health Group sank to their lowest level of the year. That may have been bad news for investors, but it was good news for William McGuire, the chief executive because the company granted him options to buy the stock in the future at that low price. If the options had been dated a month later when the stock price was 40% higher, those options would have been far less valuable. Lucky coincidence? Possibly, but the following year, Mr. McGuire was also granted options on the day that the stock price hit the year's low. And in 2001, the grant came near the bottom of a sharp dip in the stock price. Over the following years, evidence began to accumulate that executives in other companies were also being granted options at unusually favorable prices. It seemed that these firms were using hindsight to choose the date on which the options were granted. Such backdating is not necessarily illegal, but most options are granted under a shareholder-approved plan that typically requires the exercise price to be equal to the fair market value of the company's stock at the time