Jobs Apologizes But Apple Probes Continue
By: David Utter
An internal investigation at Apple revealed backdating of stock grants happened between 1997 and 2002, and CEO Steve Jobs knew of but did not benefit from those options.
The practice of backdating makes stock options even more valuable for the highly-compensated employees who routinely receive them. It is not a new practice, but it is one the Securities and Exchange Commission wants to investigate and punish.
Apple (AAPL) is one of many technology firms accused of sweetening the options pot by reporting their issue dates as being earlier than when they were approved. The company spent three months performing an internal investigation into what happened at Apple.
When their special committee reported its findings, they noted no misconduct by any of Apple's current management team. Despite this, board member and former Apple CFO resigned from his position. Apple said he considered this action in Apple's best interests at this time.
The investigation partially removed some of the spotlight from Jobs, who is generally considered to be Apple when it comes to driving the company's product designs. "In a few instances, Apple CEO Steve Jobs was aware that favorable grant dates had been selected, but he did not receive or otherwise benefit from these grants and was unaware of the accounting implications," the committee said.
Once all the smoke clears, it looks likely Apple will have to restate its financials to account for the questionable grants. This may not take Apple, Jobs, or two unnamed former Apple officers out of the SEC's penumbra of scrutiny.
While the special committee has provided the SEC with information on the actions of those two unnamed officers in relation to the stock grants, the SEC may not be happy with just a couple of people who are no longer at Apple.
When the news of the Apple investigation broke at the end of June, a Bloomberg columnist, Graef Crystal, identified 15 occasions when questionable grants took place. That is the same number found by Apple's investigating committee.
Crystal also suggested something more happened with regards to a January 17, 2001 grant to Jobs's four top executive officers:
On Sept. 29, 2000, four months before the grant, Apple stock plunged 52 percent in a single day. It continued dropping until it reached the $8.41 grant price.
Following the Jan. 17, 2001, grant date, the stock rose, in less than four months, by 58 percent.
Anyone can buy a stock after it has plummeted in value, hoping that it might rise at a rapid rate thereafter. But the key word here is "hope." If you're a senior executive at Apple, you are in possession of a lot more information than your average investor. And because you are, you are in a position to, shall we say, help Mother Nature along.
Perhaps the two unnamed former officers are among the four cited by Crystal in his opinion that the timing of those grants was too good to be true.
"I apologize to Apple's shareholders and employees for these problems, which happened on my watch. They are completely out of character for Apple," said Steve Jobs, Apple's CEO. "We will now work to resolve the remaining issues as quickly as possible and to put the proper remedial measures in place to ensure that this never happens again."
Add to Del.icio.us | Digg | Yahoo! My Web | Furl
Bookmark IFN -
|Titan Quest Forum||Nintendo Wii||Graphics Forum|
|Halo 3 Forum||Mac Software|
is an iEntry, Inc. ® publication
All Rights Reserved.