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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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RE: Did you know...
By oTAL on 1/5/2007 1:55:33 PM , Rating: 2
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.


That, I am in no position to argue since, as I mentioned, I am not American and I don't closely follow the smaller issues in your country. That means I have to take your word for it.
On the other hand, you should be able to admit that anyone who quotes Al Gore as saying "I invented the internet" is a sheepish numbnut and should be corrected (or disregarded).


RE: Did you know...
By oTAL on 1/5/2007 2:31:23 PM , Rating: 2
One interesting thing on our little discussion here is that we are both presenting our arguments constructively (unlike some other people who replied to the thread) and, given the choice, I'd uprate your comments although I may not agree with them. Yet, I always get slammed for actively and coherently displaying my opinion when it goes against the masses. Still, when my opinion follows the masses I feel less need to express it (which, when it happens, usually gives me high ratings).
I guess that means follow the herd types, with a knack for quick witty jokes, get the high ratings around here....


"The Space Elevator will be built about 50 years after everyone stops laughing" -- Sir Arthur C. Clarke











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