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Strategies & Market Trends : Option Granting Practices and exploits -- Ignore unavailable to you. Want to Upgrade?

To: RockyBalboa who wrote (105)	12/28/2006 9:26:58 AM
From: RockyBalboa	Respond to of 165

Report: Apple Probed on Stock Options Thursday December 28, 3:53 am ET By May Wong, AP Technology Writer Apple Computer Shares Go on Roller-Coaster Ride After Reports of Forged Documents Probe SAN JOSE, Calif. (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.

To: RockyBalboa who wrote (105)	12/29/2006 8:37:17 AM
From: Glenn Petersen	Read Replies (1) \| Respond to of 165

Apple's own options probe finds no misconduct Company has 'complete confidence' in CEO Jobs despite irregularities The Associated Press Updated: 7:22 a.m. CT Dec 29, 2006 SAN JOSE, California - Apple Computer Inc. said its investigation of stock-option grants found no misconduct by current management, but it did find that Chief Executive Steve Jobs recommended or was aware of the selection of some favorable grant dates. However, Apple said Jobs did not financially benefit from the grants and the special committee that investigated the company said it has “complete confidence” in the CEO. Its options mishandling will result in an additional noncash charge of $84 million, the Cupertino, Calif.-based company said Friday. In its full-year financial report filed with the Securities and Exchange Commission, which was delayed due to the options probe, Apple said earnings for fiscal years 2006, 2005 and 2004 will be lowered by $4 million, $7 million, and $10 million respectively. Apple shares rose more than 4 percent to $84.30 in pre-market trading after the news. The three-month probe identified a number of instances in which option grant dates were intentionally selected in order to obtain favorable exercise prices, the company said. “The special committee, its independent counsel and forensic accountants have performed an exhaustive investigation of Apple’s stock option granting practices,” former Vice President Al Gore, chair of the special committee, and Jerome York, chair of Apple’s Audit and Finance Committee, said in a joint statement. “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.” The maker of the iPod music player and Macintosh computers is one of the most prominent among some 200 companies that have come under scrutiny for backdating stock options. It’s a widespread practice, especially in Silicon Valley, that involves pegging stock options to favorable grant dates in the past to boost the recipients’ award. The manipulation itself isn’t necessarily illegal, but securities laws require companies to properly disclose the practice in its accounting and settle any charges that may result. Dozens of companies have been forced to restate their earnings, erasing some of their earlier recorded profits, after their stock option shenanigans came to light. Apple initiated its own stock options probe in June and delayed its quarterly report for the period ending July 1 and its annual report for the fiscal year ended Sept. 30 as a result. Apple said its investigation reviewed 42,077 stock option grants made on 259 dates between October 1996 and January 2003. Of those, 6,428 grants on 42 dates did not have the proper measurement dates, Apple said. Of two option grants awarded to Jobs, one was improperly dated Oct. 19, 2001, with an exercise price of $18.03, instead of the correct date on Dec. 18, when Apple shares were trading at $21.01. That stock-option grant was for 7.5 million shares. Jobs later surrendered those options without exercising them and realized no financial benefit. Though the probe exonerated current management, it did raise “serious concerns” with the stock-options accounting actions of two former officers, the company stated. Apple did not identify those officers. The company said it has provided the results of its internal review and independent investigation to the SEC and the U.S. Attorneys Office for the Northern District of California and has responded to their “informal requests” for documents and additional information. © 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.Copyright 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. msnbc.msn.com