Apple backdating stock options
"In the SEC statement, it said it would not bring charges against Apple based in part on its swift, extensive and extraordinary cooperation in the commission's investigation," Apple spokesman Steve Dowling said."I don't think they dole these words out lightly." Heinen, 50, did not return a call to her home, but her lawyer said it was unfair to single her out for enforcement action among executives at more than 170 companies swept up in stock option scandals. Heinen engaged in fraud is to misunderstand the facts of what happened," Miles Ehrlich said in a statement.Investors are particularly focused on whether the options scandal will hurt Jobs, 52, who co-founded Apple in 1976 and has been the driving force behind Apple's turnaround in recent years.The maker of the Macintosh computer and the i Pod portable music player has attracted a cult-like following for its innovative products.Fifty-two companies currently under criminal investigation. Moreover, the company avoids having to expense the options as current compensation, thus increasing earnings in the near term. As a consequence, the option is immediately profitable, or “in the money,” to the option holder."Shortly after the Board approved the 7.5 million option grant, Jobs expressed dissatisfaction with its vesting schedule," the complaint said of the period after August 2001.After a series of discussions between compensation committee members and Jobs, the filing alleges, the options price was set in December 2001 at .30 -- although the stock at the time was trading at .01.
The agency said it would not bring enforcement action against Apple , but that did not preclude more action against individuals at the company, said an SEC official in San Francisco. It said the false grant dates helped Apple avoid reporting nearly million in expenses and said Heinen had fictitious board notes created regarding the options.Such practices are frowned upon by the Securities and Exchange Commission.Apple's practice of backdating stock options began in 1997 and continued into January 2002.The company says that 15 stock option grants during that time period appear to have been backdated, but that no members of Apple's "current management team" engaged in any misconduct around the options.
However, Apple says there are "serious concerns" surrounding actions taken by two former officers in connection to the problems.Apple has turned over its findings to the SEC, including those covering the the two unnamed former officers whose actions "raised serious concerns." There is also a chance that the stock options problem could result in Jobs' exit from the company, but many observers believe that is unlikely, as it would not be in the best interest of either Apple or its shareholders.