updated 09:05 am EST, Thu December 28, 2006
Apple falsifies records
Apple's stock fell Thursday following a report that indicated Apple's Steve Jobs was given 7.5 million stock options in 2001 without the required authorization from the company's board of directors. Apple stock fell $1.64 or about 2 percent in pre-market trading. The Financial Times reports that records that purported to show a full board meeting had taken place to approve the stock options remuneration, as required by Apple's procedures, were later falsified. The records are now among the pieces of evidence being reviewed by the Securities and Exchange Commission as it decides whether to pursue a case against the company or any individuals over the affair, the report claims. Apple is expected to reveal news of the irregularities in a regulatory filing before the end of this week and only days after Jobs hired a lawyer--both of which are likely add to questions about Apple's disclosures about its internal investigation into the backdating issue.
In October, the company largely exonerated Jobs over the matter, saying that while he had been "aware" of the backdating "in a few instances", he "did not receive or otherwise benefit from these grants and was unaware of the accounting implications".
Analysts believe that Apple's CEO Steve Jobs will not be implicated and that the move was a normal course of action for the executive, given his immense personal fortune and influence in the industry.
Jobs' stock options under review were handed were given in October 2001 at an exercise price of $18.30 a share, but the alleged board authorization was dated near the end of the year, indicating that the benefits were both not properly authorized and that the options were backdated to maximize the value of the options.
Jobs, however, later surrendered his options before they were exercised, thus he did not "gain any direct. The Apple CEO was later given a grant of restricted stock by the company instead. The value of the stock grant, however, may have been calculated on the backdated options.
The report says that Apple's lawyers have briefed people involved in the case on the findings of the company's internal review of the matter, though it remains unclear how much detail will be included in the filing. Under Apple's rules, the chief executive's remuneration must be set by a compensation committee of independent directors and later authorized by the full board.
An Apple spokesman reportedly refused to comment on the matter, but said the company had handed the findings of its internal enquiry to the SEC. In October, Apple said that it had found "no misconduct by any member of Apple's current management team" but that its investigation "raised serious concerns regarding the actions of two former officers". At the same time, it also announced the resignation from its board of former CFO Fred Andersen--although he had not been a director at the time of the 2001 options grant.