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.
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
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
"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.
quote: He vastly exaggerrated his own contribution. It certainly wasn't a "slip up", and it merely continued his long-standing tradition of inflating his actions beyond all pretense of reality.