Apple Stock Irregularities Probe Completed, Fallout Begins
In a press release issued today, Apple announced that its independent investigation into stock option grant irregularities has been completed. The investigation's key findings are as follows:
-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 had the following statement regarding the probe's findings:
"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."
With the investigation's end, former Apple CFO Fred Anderson (CFO 1996-2004) announced his resignation from Apple's board of directors, beginning the investigation's fallout. Earlier this year, Apple missed the deadline for reporting their 3Q filing with the US Securities and Exchange Commission due to the accounting errors related to the "irregularities", which prompted Nasdaq to warn Apple of possible delistment from the exchange if the situation was not promptly rectified. Apple will most likely have to re-state historical financial statements.
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.