updated 10:00 am EDT, Wed October 11, 2006
Apple stock probe issues
A new report calls into question Apple's own audit of stock option irregularities, saying two members may have been invovled themselves with awarding problematic grants. Apple's special board committee who investigated the stock option irregularities included one board member who had been involved with awarding Apple options to executives and another whose former company is scrutinizing option grants made while he was its chief executive. Raising questions about conflicts of interest, The Wall Street Journal reports that Apple Board member Jerome York, responsible for awarding some of the option grant under review, recused himself from the three-member special committee's examination of awards granted during the period he considered himself directly involved in compensation matters. Google CEO Eric Schmidt, who joined Apple's Board in late August and declined options offered by the company, worked at Novell between 1997 and 2001, part of a period that is the subject of an internal probe of possible options backdating issues. The third member of the special committee was former U.S. Vice President Al Gore, who became an Apple director after the Apple options under question were granted, according to the report.
Although Apple's internal investigation may have cleared Apple CEO Steve Jobs and other current management of any wrong doing, company cited "serious concerns" over the actions of two former (unnamed) execs, which may include former CTO Fred Anderson--who resigned from the Board on the same day as the announcement--and former Apple legal chief Nancy Heinen. Additionally, the findings prompted an apology from Jobs, who said that while he was aware of the favorable dating of options, he did not realize the accounting implications.
"I apologize to Apple's shareholders and employees for these problems, which happened on my watch. They are completely out of character for Apple," Jobs said in a statement released to the media. "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."