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Steve Jobs was aware of backdating scandal, but cleared of wrongdoing

Apple today filed its Form 10-Q for the quarter ended July 1, 2006 and its Form 10-K for the fiscal year ended September 30, 2006 with the Securities and Exchange Commission. Both filings had been delayed pending the conclusion of an independent investigation by the special committee of the board of directors into past stock option practices and the resulting restatement of the company's financial results.

The Financial Times yesterday reported that Steve Jobs took a $7.5 million stock options reward in 2001 without the required authorization from the company’s board of directors. According the news story, Apple had a false record of a board meeting to approve the stock options, which never actually took place.

An excerpt from the report filed to the SEC gives an explanation of the matter:

The Special Committee’s investigation identified a number of grants for which grant dates were intentionally selected in order to obtain favorable exercise prices. The terms of these and certain other grants, as discussed below, were finalized after the originally assigned grant dates. The Special Committee concluded that the procedures for granting, accounting for, and reporting stock option grants did not include sufficient safeguards to prevent manipulation. Although the investigation found that CEO Steve Jobs was aware or recommended the selection of some favorable grant dates, he did not receive or financially benefit from these grants or appreciate the accounting implications. The Special Committee also found that the investigation had raised serious concerns regarding the actions of two former officers in connection with the accounting, recording and reporting of stock option grants.

Based on an analysis of the findings of the independent investigation, the Apple has recognized total additional non-cash stock-based compensation expense of $84 million after tax, including $4 million and $7 million in fiscal years 2006 and 2005, respectively. The restatement arises solely from certain stock option grants made between 1997 and 2002; the investigation found no grants after December 31, 2002 that required accounting adjustments.

Although some believe that Steve Jobs’ future at Apple is now in question, the company said in a statement that its trust in its CEO has not changed.

"The special committee, its independent counsel and forensic accountants have performed an exhaustive investigation of Apple's stock option granting practices," in a joint statement said Al Gore, chair of the special committee, and Jerome York, chair of Apple's Audit and Finance Committee. "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." Al Gore is also a director of Apple Computer.

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to me, its Kharma
By retrospooty on 12/30/2006 12:58:55 PM , Rating: 2
Steve Jobs deliberately lies and cheats to get what he wants (up until now we only knew about the exaggerated performance claims and falsified benchmarks), and now it bites him in the arse. =)

RE: to me, its Kharma
By TheShniz on 12/30/2006 1:18:57 PM , Rating: 2
Where exactly are you citing these quotes from? There is no mention of Al Gore or the last quote mentioned in the reference. Come on Marcus, editing should come BEFORE publishing.

RE: to me, its Kharma
By KristopherKubicki on 12/30/2006 1:31:36 PM , Rating: 1
It's from the Apple press release on the matter. I added a link:

RE: to me, its Kharma
By masher2 on 12/30/2006 1:46:45 PM , Rating: 2
Yes...and Al Gore chaired Apple's special committe which granted these options, and 'investigated' after the resultant scandal. That's something you won't see reported on CNN either.

RE: to me, its Kharma
By nurbsenvi on 12/30/2006 1:57:05 PM , Rating: 2
Steve Jobs is a show host he puts up a good show for the industry

I hate him

"Well, we didn't have anyone in line that got shot waiting for our system." -- Nintendo of America Vice President Perrin Kaplan

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