ML analyzes Apple probe

Analyst firm Merill Lynch today analyzed Apple's internal probe into stock grant irregularities. The probe is investigating the issuance of certain stock option grants made between 1997 and 2001, including one grant to Apple CEO Steve Jobs himself, which was subsequently cancelled resulting in no financial gain. Independent counsel will investigate the matter, and the SEC has been informed of the investigation. Merill Lynch currently marks Apple's volatility risk as "high," and maintains a "neutral" rating on Apple shares. [updated]

Including Steve Jobs, 5 percent of grants within 5 percent of fiscal year low

Of the total number of options granted (adjusted for splits) to named executives, Merill Lynch found that 5 percent of options were granted at a share price that was less than 5 percent from the fiscal year low. The research firm also found that 9 percent of option grants were less than 10 percent from the fiscal year low, appearing as a small percentage of overall executive option grants.

Excluding Steve Jobs, 15 percent of grants within 5 percent of fiscal year low

However, excluding options granted to Steve Jobs (which were priced at levels far above the fiscal year low), 15 percent of options were granted at a share price that was less than 5 percent from the fiscal year low and 24 percent of options were granted at a share price less than 10 percent from the fiscal year low.

"Perhaps these are the grants that may have triggered the internal investigation," said Richard Farmer, analyst for Merill Lynch.

by MacNN Staff