|
| UPDATED: 2006-06-30 |
 Apple Bitten By Options Issues 
By: David Utter 2006-06-30 An internal investigation into the issuance of stock options at Apple Computer has uncovered irregularities related to certain grants made between 1997 and 2001, including one to CEO Steve Jobs that was canceled.  The lid of secrecy tipped open for a brief moment at Apple (AAPL), as the company issued a statement at market close yesterday about some potential problems with its granting of stock options during the dot-com boom period:
Apple(R) today announced that an internal investigation has discovered irregularities related to the issuance of certain stock option grants made between 1997 and 2001. One of the grants in question was to CEO Steve Jobs, but it was subsequently cancelled and resulted in no financial gain to the CEO. A special committee of Apple's outside directors has hired independent counsel to perform an investigation and the company has informed the SEC. Apple executives will refrain from commenting further on this matter until the independent investigation is concluded.
"Apple is a quality company, and we are proactively and transparently disclosing what we have discovered to the SEC," said Apple CEO Steve Jobs. "We are focused on resolving these issues as quickly as possible." And just as quickly, the lid clamped down again. While Jobs certainly wants to get Apple through this little crisis as quickly as possible, the SEC may wish to linger painfully on these irregularities. Playing games with stock options has ended up causing problems at many companies, and resolving them to the SEC's satisfaction, not to mention that of the shareholders', could be an expensive prospect. The practice of backdating stock grants, where a company issues those options on one date but reports they issued them on an earlier date, provides a more favorable strike price for the recipient. Depending on the number of shares, even a small adjustment could result in a windfall of millions of dollars. Columnist Graef Crystal at Bloomberg News has suggested that Apple's irregularities are not just the result of backdating, but possibly "opportunistic grant timing" based on insider information. Crystal examined 15 different option grants made by Apple between 1994 and 2002. Apple discontinued granting options in 2003. He singled out three grants, one of which was the one to Jobs that was canceled after the stock's price dropped below the option price. Jobs returned that grant to Apple, and received a lesser number of free shares in return. "Had the option been granted at a more representative price during the fiscal year, I believe he would likely have received fewer free shares," writes Crystal. On July 11, 1997, Apple repriced senior executive stock options from 7.44 to 3.31. Crystal said that was the third lowest closing price for Apple's stock that fiscal year. After that repricing took place, Apple's stock jumped 33 percent less than a month later; Crystal called that "good timing." Then on January 17, 2001, four top executives under Jobs received grants of 2 million shares each, priced at 8.41. Apple's stock had been dropping for four months by that point. Crystal noted that after the grant, the stock rose by 58 percent in less than four months. Crystal closed his column by hinting Apple's senior executives anticipated the rise due to the insider information they possessed at the time. The SEC will be keen to determine if that is true. Penalties for this kind of misbehavior can be substantial. --- Tag: Apple Add to  Del.icio.us |  Digg |  Yahoo! My Web |  Furl
Bookmark IFN - 
View All Articles by David Utter About the Author: David Utter is a staff writer for InternetFinancialNews and WebProNews covering technology and business. |
|
|||||||||||
 |
| InternetFinancialNews
is an iEntry, Inc. ® publication
© $line) {
echo $line ;
}
?> All Rights Reserved. Privacy Policy - Legal - Sitemap - Contact Us - RSS Feeds |
