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Apple says its own options probe finds no misconduct by managers

Apple says its own options probe finds no misconduct by managers

Apple Computer Inc. said its investigation of stock-option grants found no misconduct by management, but it did find that Chief Executive Steve Jobs recommended or was aware of the selection of some favorable grant dates.
However, Apple said Jobs did not financially benefit from the grants and the special committee that investigated the company said it has "complete confidence" in the CEO.
Its options mishandling will result in an additional noncash charge of $84 million (euro63.8 million), the Cupertino, California-based company said Friday. In its full-year financial report filed with the Securities and Exchange Commission, which was delayed due to the options probe, Apple said earnings for fiscal years 2006, 2005 and 2004 will be lowered by $4 million (euro3 million), $7 million (euro5.3 million), and $10 million (euro7.6 million) respectively.
Apple shares rose more than 4 percent to $84.30 in pre-market trading after the news.
The three-month probe identified a number of instances in which option grant dates were intentionally selected in order to obtain favorable exercise prices, the company said.
"The special committee, its independent counsel and forensic accountants have performed an exhaustive investigation of Apple's stock option granting practices," former Vice President Al Gore, chair of the special committee, and Jerome York, chair of Apple's Audit and Finance Committee, said in a joint statement. "The board of directors is confident that the company has corrected the problems that led to the restatement, and it has complete confidence in Steve Jobs and the senior management team."
The maker of the iPod music player and Macintosh computers is one of the most prominent among some 200 companies that have come under scrutiny for backdating stock options. It's a widespread practice, especially in northern California's Silicon Valley, that involves pegging stock options to favorable grant dates in the past to boost the recipients' award.
Dozens of companies have been forced to restate their earnings, erasing some of their earlier recorded profits, after their stock option manipulations came to light.
Apple initiated its own stock options probe in June and delayed its quarterly report for the period ending July 1 and its annual report for the fiscal year ended Sept. 30 as a result.
Apple said its investigation reviewed 42,077 stock option grants made on 259 dates between October 1996 and January 2003. Of those, 6,428 grants on 42 dates did not have the proper measurement dates, Apple said.
Of two option grants awarded to Jobs, one was improperly dated Oct. 19, 2001, with an exercise price of $18.03, instead of the correct date on Dec. 18, when Apple shares were trading at $21.01. That stock-option grant was for 7.5 million shares. Jobs later surrendered those options without exercising them and realized no financial benefit.


Updated : 2021-04-14 23:25 GMT+08:00