Barnes & Noble (NYSE:BKS) is the latest to admit it backdated options.

We know that the practice was common from the company's press release. Below I've taken two excerpts from the press release and followed them with my interpretation as an individual investor and a little commentary.

The Special Committee noted that more than 3,300 Company employees were recipients of stock options during the period reviewed and that the overwhelming majority of people who received grants were employees who were not members of senior management or directors of the Company.

Should it surprise anyone that if 3,300 employees received options that the majority of them were not directors or in senior management? How about going back and looking at the percentage of total options granted and fessing up as to how many were granted to senior managers or directors. Actually, don't bother. It's not who received the options that makes the practice of backdating wrong. It's that the practice existed in the first place.

Although the Special Committee determined that there were instances of stock options having been dated using favorable dates that were selected with the benefit of hindsight and that serious mistakes were made, the Special Committee did not find any intent to defraud or fraudulent misconduct by any individual or group of individuals. The Special Committee found that the Company's dating and pricing practice for stock options was applied uniformly by Company personnel to stock options granted and was not used selectively to benefit any one group or individual within the Company.

This portion of the press release is an extension of logic from the first quote. Since the company applied its backdating policy to every employee and not to a specific group of people, there couldn't have been any intent to defraud. Right? Barnes & Noble doesn't specifically say when its backdating took place, only that the special committee looked at documents from 1996 to 2006, so we don't know what role Sarbanes-Oxley played here. I have, however, found it interesting that most companies stopped or curtailed the practice after Sarbanes-Oxley.

Perhaps what's most interesting of all about the company's backdating is that it says its lawyers told the company that it was OK. Perhaps from a legal standpoint it was, but I can't imagine that anyone looking at the economics of such a transaction would call it fair or the proper way to treat co-owners.

The company has taken steps to reprice options that were given improperly by pricing them at what is believed to be their fair value on the grant date. This is a good start, but it pales in comparison with UnitedHealth Group (NYSE:UNH), which repriced its open options to the highest price point in any given year for its executives. Barnes & Noble has, however, decided to follow the same practice we saw recently at Costco (NASDAQ:COST). Costco's CEO returned any misbegotten gains from options due to price differences between the grant date and options pricing date. This amounts to $1.98 million. It's a step in the right direction, and it's one of the few signs in the press release of the company trying to make things right for mistreating its owners.

Unitedhealth Group is both a Motley Fool Inside Value selection and a Motley Fool Stock Advisor selection. Costco is also a Stock Advisor recommendation.

At the time of publication, Nathan Parmelee owned shares in Costco. He had no financial interest in any of the other companies mentioned. He was ranked 100th out of 25,493 Motley Fool CAPS investors. The Motley Fool has an ironclad disclosure policy.