Apple Computer Stock Option Irregularities

Thursday June 29, 2006 10:30 pm PDT by Doctor Q

Apple today revealed that there were "irregularities" in some grants for stock options made in the years 1997 through 2001. The irregularities were reported to the U.S. Securities and Exchange Commission.

One such grant was made, apparently in January 2000, to CEO Steve Jobs. Because the options were canceled in March 2003 without being cashed in, Jobs saw no financial benefit. But financial analysts say that Apple's finances will be closely watched to see if there were any improprieties in Apple's disclosures or any evidence of backdating. Sales of discounted options in years past have been considered legal but sometimes problematic.

Apple hired an independent law firm to investigate the problems and the SEC will likely launch an inquiry as well.

Dozens of corporations, including Microsoft, Intuit, and Computer Associates, have announced that they are reviewing their option practices, which have come under increased scrutiny since enactment of the Sarbanes-Oxley corporate accountability law in 2002.

From The Financial Times:

Apple did not detail the "irregularities" and said executives would refrain from commenting until the investigation was concluded. "Apple is a quality company and we are proactively and transparently disclosing what we have discovered to the SEC," said Mr Jobs. "We are focused on resolving these issues as quickly as possible."

Top Rated Comments

(View all)

iGary

73 months ago

Apple(R) today announced that an internal investigation has discovered irregularities related to the issuance of certain stock option grants made between 1997 and 2001. One of the grants in question was to CEO Steve Jobs, but it was subsequently cancelled and resulted in no financial gain to the CEO. A special committee of Apple's outside directors has hired independent counsel to perform an investigation and the company has informed the SEC. Apple executives will refrain from commenting further on this matter until the independent investigation is concluded.

"Apple is a quality company, and we are proactively and transparently disclosing what we have discovered to the SEC," said Apple CEO Steve Jobs. "We are focused on resolving these issues as quickly as possible."

Apple ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the Macintosh. Today, Apple continues to lead the industry in innovation with its award-winning desktop and notebook computers, OS X operating system, and iLife and professional applications. Apple is also spearheading the digital music revolution with its iPod portable music players and iTunes online music store.

NOTE: Apple, the Apple logo, Mac, Mac OS and Macintosh are trademarks of Apple. Other company and product names may be trademarks of their respective owners.