Stock options: From backdating to spring loading

•The introduction of the Sarbanes-Oxley Act (SOX) in 2002 and the Security and Exchange Commission's implementation of the Act in 2006 ended the practice of backdating options.•The practice of backdating was substituted with the practice of “spring loading” options around analysts’ price targets announcements.•Analysts’ price targets constitute a new indicator to measure spring loading.•The evidence provide further insight into the current debate regarding managerial compensation.

In this article I explore the impact of the introduction of the Sarbanes–Oxley Act (SOX) in 2002 and the Securities and Exchange Commission's implementation of the Act in 2006 on the options granting process. I show that after the introduction of the SOX and its implementation the practice of backdating options was substituted with the practice of “spring loading” options around analysts’ price targets announcements.