Following media reports that Federal investigators were looking into allegations Apple Computer executives had knowingly falsified documents regarding favorable stock option grants awarded to employees, Apple Computer has filed its Form 10-Q and Form 10-K with the Securities and Exchange Commission, restating the company’s financial results.
As a result of its own internal investigation, Apple will take a charge of $84 million due to stock option grants made between 1997 and 2002. According to Apple, no option grants made after December 31, 2002, required any accounting adjustments. The investigation was conducted by a special committee of Apple’s Board of Director; the committee was chaired by former Vice President Al Gore.
“The special committee, its independent counsel and forensic accountants have performed an exhaustive investigation of Apple’s stock option granting practices,” said Gore in a joint statement with Jerome York, chair of Apple’s Audit and Finance Committee. “The board of directors is confident that the Company has corrected the problems that led to the restatement, and it has complete confidence in Steve Jobs and the senior management team.”
In the filing, Apple said that dates on some 6,428 grants on 42 separate dates were improper, including two grants to Jobs in 2000 and 2001, which were never exercised, and subsequently cancelled in March 2003. The company admits CEO Steve Jobs and other managers recommended or were aware of some inaccurate option grant dates, but they did not personally benefit from the grants; Apple said as much in October 2006 when it launched the investigation.
The lack of incriminating information about the role of iconic CEO Jobs in the options irregularities will likely lead to a short-term stabilization of Apple’s share price, which had been fluctuating on speculation Jobs might be forced to leave the company under a cloud.