Apple Computer Cored Over Stock Options

Report: Documents May Have Been Forged, CEO Jobs May Have Gotten Benefits Without Approval

(AP)  Apple Computer Inc.'s stock option troubles underwent extreme twists following reports of a federal probe into the possible forgery of documents to bolster executives' profits and that CEO Steve Jobs received 7.5 million stock options in 2001 without proper board approval.

Citing unnamed people familiar with the matter, the British newspaper Financial Times reported late Wednesday that federal investigators were looking into evidence of the falsification of records that purported Jobs' options were approved by a full board.

In October, Apple said its own internal probe had found no misconduct by any current officers and largely exonerated Jobs of any wrongdoing. But financial analysts, along with Wall Street, have shrugged off the story, seeing little impact as long as Jobs, Apple's iconic and charismatic executive, remained unscathed.

The media reports Wednesday revealed new details of the situation.

Earlier in the day, a legal publication that detailed the possible forgery also reported that Jobs has hired his own attorneys outside of the company's legal team to represent him in the investigation.

That report sent shares of the iPod and Macintosh computer maker on a roller-coaster ride in trading Wednesday, falling almost 5 percent before rebounding to close at $81.52, up a penny, on the Nasdaq Stock Market.

In a morning note, UBS Investment Research Analyst Ben Reitzes called investors' fears "overblown."

"Investors seem to be reacting to the mention of Steve Jobs," Reitzes said in his note. "We believe it could make sense to obtain counsel given his immense personal fortune and influence."

The Recorder, a San Francisco-based publication owned by American Lawyer Media, reported late Tuesday that federal prosecutors were looking into forged documents at Apple related to administering stock options. The report cited people with knowledge of the case who requested anonymity because the case is the subject of criminal and civil government investigations.

Apple spokesman Steve Dowling said the company is providing the Securities and Exchange Commission with the results of its internal investigation into its stock options granting practices, but had no further comment Wednesday.

Apple is one of nearly 200 companies that have disclosed SEC, DOJ or internal investigations of potential backdating of stock options. Backdating refers to retroactively pegging the strike price of an option to a day when the stock traded cheaply. Options with low strike prices are more valuable to their owner because they are less expensive to exercise.

In October, Apple said the internal investigation found no misconduct by any current officers but raised concerns about how two former officers recorded and accounted for stock options. Citing people with knowledge of the investigation, The Recorder also reported those two former officers were General Counsel Nancy Heinen and Chief Financial Officer Fred Anderson.

Anderson retired as Apple's CFO in 2004 yet remained a board member until he resigned in October after the internal inquiry. Heinen left Apple for unknown reasons in the spring, before Apple initiated its stock options probe in June.

Apple said the probe found accounting "irregularities" that occurred between 1997 and 2002. The troublesome awards included millions of options given to Jobs, though he subsequently surrendered the awards in 2003.

Echoing other analysts who have said they do not believe Jobs' position will be affected by the scandal, Piper Jaffray analyst Gene Munster said Wednesday he remains convinced that Jobs was not involved in any wrongdoing.

"Apple has issues with stock options but I don't think it matters unless Steve Jobs is impacted," Munster said. "I think Wall Street could care less about this. They've already got two fall people — Nancy and Fred — and what it comes down to for investors is how many iPods they sold in the December quarter."

On Dec. 15, Apple said it was delaying filing its annual report with the Securities and Exchange Commission due to its ongoing investigation into stock option grants. In a filing with the SEC, the company said it needs to restate historical financial statements to record charges for compensation related to past grants. As a result, Apple was unable to file its 10-K Form for the fiscal year ended Sept. 30 by the required filing date of Dec. 14.

Apple expects to file its annual report and its quarterly report for the period ending July 1 by Friday.

Shares of Cupertino, Calif.-based Apple have traded in a range of $50.16 and $93.16 in the past year.

[toshi43]

Now this is funny. Hissteps4u chides people he/she disagrees to 'go get an education' yet writes, spells and punctuates like a sixth-grader. Jelious? Hights? Striped? (Tigers are striped...) Who's the 'nitwhit' here?

[cantshutup]

hissteps4u...lmao! the only ignorance 'round here is coming from you...your venom humors and bores me...*yawn*

[edjohn66]

hissteps4u,

"He deserves what ever he can get from his own efforts."

"Wouldnt you want to be paid for the fruits of your labor?"


Labor? Efforts? Steve Jobs is a great idea-guy, but lets not get carried away. HE didn't supply the labor and effort that went into making ipods and imacs. Yes, he is a valuable part of the company, but is he worth 100 times what the average employee makes?

You MUST be a CEO, hissteps4u. Otherwise, your beliefs would mean that you AGREE that your boss is worth 100 times more than you.

I personally have a much higher opinion of myself and my worth, and thus have a serious problem that CEOs are paid so much higher than the average worker.

[hissteps4u]

Cantshutup your Unbelievably ignorant! Jelious perhaps it was not you instead of Steve? this Creator who was ousted from his own company only to return and bring it back to new hights! your ignorance is bliss. He deserves what ever he can get from his own efforts.

Wouldnt you want to be paid for the fruits of your labor? He is no different than you you ignorant twerp. Grow up. go get an education and perhaps you too can contribute something to society that is untill some dumb nitwhit like you rises up to say you cant earn that much money and ought to be striped of the Millions you helped to build you would sing a different tune then you half whit under educated Halfling from The Shire......

[cantshutup]

I keep wondering the same thing lochlan...why don't the people of this country RISE UP?????? We've got thieves and liars in government, ceo's with 7.5 million in stock options...the list goes on and on...how much do they need? How much are we going to put up with? Why don't American citizens rise up??? The conditions we are tolerating are unbelievable!!!

[lochlan-2009]

Typical CEO mentality, let's just put them in jail for life. The billions of dollars they have is not enough, they need more, and they have the money and attorney's to defend themselves against the working class Joe they stole from. Hell, all the government wants is their fine to be paid so they can get their bit of the pie, than they'll tell these guys to pay it back at pennies on the dollar, and all is forgiven. Some day, God willing, the people of this country will rise up, tired of being robbed by the elite and supported by the bought and payed for government, and ship these thieves to be tortured in some camp in the middle east. How I prey for that day.