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Five former executives at the companies have been charged with crimes.

Because the option value is higher if the exercise price is lower, executives prefer to be granted options when the stock price is at its lowest.

Backdating allows executives to choose a past date when the market price was particularly low, thereby inflating the value of the options.

SAN FRANCISCO (Market Watch) -- KB Home CEO, President and Chairman Bruce Karatz has resigned after an internal investigation found that he backdated his own stock-option grants to increase his pay and will forfeit about $13 million in gains from the backdating, according to a media report Sunday.

KB Home said Karatz would be succeeded as CEO by Jeffrey T.

Ray, the head of human resources, The Journal said.

Hirst resigned and Ray was terminated, The Journal said.Mezger, the company's chief operating officer, The Wall Street Journal reported in its online edition.See Wall Street Journal story (Subscription required).KB Home didn't detail how the backdated options came to pass, though it said Karatz and Ray selected the dates for the options, The Journal said.KB Home's board determined that the dates between 19were selected retroactively by the men without permission of the board, though the investigation didn't find evidence of intentional wrongdoing, The Journal said, citing an unnamed person familiar with the matter.Backdating involves pretending that an option was granted on an earlier date when the market price was lower, conveying an opportunity for extra profit.

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