updated 09:20 am EST, Fri December 29, 2006
Apple takes $84m charge
Apple will restate financial data going back to 2002 and take an $84 million ($105 million pre-tax) charge after a board committee found the company had improperly backdated thousands of stock options grants to employees and executives. The company took a a charge of almost $20 million to adjust for Apple CEO Steve Jobs' options, but exonerated current management and Jobs, saying it has "complete confidence" in its chief executive. The additional details of the Apple options backdating scandal were revealed in filings with the Securities and Exchange Commission on Friday. Confirming earlier, Apple said that Jobs was aware of the favorable grant dates and that there was no misconduct by Apple's current management; however, the review added that Jobs recommended some of the favorable grant dates, though he didn't profit from them. Earlier this week, Apple's stock fell as reports surfaced that the Mac and iPod manufacturer falsified authorization of 7.1 million stock options to Jobs and that Jobs hired legal counsel ahead of a pending investigation by the SEC.
Apple's investigation found that Jobs was aware or recommended the selection of some favorable grant dates, but the committee confirmed that he did not receive or financially benefit from these grants or understand the accounting implications. The Special Board 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, according to a report in The Wall Street Journal.
Apple found that 6,428 grants on 42 dates were not properly recorded, but that no adjustments were required for the remaining 35,649 grant during the period between October 1996 and January 2003. In 2002, Apple said it made significant changes in its stock option granting practices in response to evolving legal, regulatory and accounting requirements.