Apple probe reveals stock option irregularities, board member resigns
Quote:
Apple probe reveals stock option irregularities, board member resigns
Submitted by Alexandros Roussos on Thu, 2006-10-05 02:29. (GMT)
Apple has published a statement regarding the probe the company has started in June so as to find if there were irregularities with stock-option grants. The company will likely restate its earnings as a result of these irregularities.
The indepedendant investigation has mainly reavealed the following irregularities:
* The investigation found no misconduct by any member of Apple's
current management team.
* The most recent evidence of irregularities relates to a January 2002
grant.
* Stock option grants made on 15 dates between 1997 and 2002 appear to
have grant dates that precede the approval of those grants.
* 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 investigation raised serious concerns regarding the actions of
two former officers in connection with the accounting, recording and
reporting of stock option grants. The company will provide all
details regarding their actions to the SEC.
Steve Jobs has also made a statement so as to apologize shareholders for his bad conduct:
"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."
Additionally, Apple's former CFO Fred Andersen has resigned from the company's board of directors, as he was Apple's CFO when the irregularities happened. He said he believes "it is in Apple's best interest that he resign from the board at the present time."
Analysts are relieved about the fact that Jobs is unlikely to be ousted from Apple but remain concerned as the stock can be negatively impacted if the earnings restatements include major changes to Apple's financial results.
"The risk was that if something bizarre happened and Steve Jobs got fired over it, that could have significantly impacted the company in a negative way. Steve Jobs is Apple. Ultimately, the scope of the backdating was bigger than we thought, but the impact turned out to be less severe." told Piper Jeffrey's Gene Munster to the AP.
Apple has filed an 8K form so as to officialize its statement with the SEC. The stock was up $1.30 (or 1.75%) at $75.38 during the regular trading session but fell back $0.58 (0.77%) to $74.80 during after hours trading.
