by CIO Staff

Apple: Stock Option Grant ‘Irregularities’ Found

Jun 30, 20062 mins

Apple Computer, producer of the uber-popular iPod digital music player, on Thursday announced that an internal investigation of stock option grants found “irregularities” in relation to how its stock options were issued to employees, including Chief Executive Steve Jobs, between 1997 and 2001, Reuters reports via USA Today.

As a result of the announcement, Cupertino, Calif.-based Apple’s shares dropped by more than 2 percent in after-hours trading, according to Reuters.

An Apple board of directors committee commissioned an independent counsel to run the investigation, and Apple has notified the U.S. Securities and Exchange Commission (SEC) of its actions, Reuters reports.

The news comes at a time when 20 or so firms, including a large percentage of technology companies, are catching heat from the U.S. government for the ways in which they issued stock grants over the past few years. At issue is whether the companies backdated stock options to ensure that executives took in as much cash as possible. Though the practice is not against the SEC’s regulations, it must be properly disclosed in SEC filings and allowed under company policies, and all accounting must be accurate, legal experts told Reuters.

The suspected stock option grant issued to Jobs was eventually canceled, and Apple’s CEO never profited from it, Reuters reports.

“Apple is a quality company, and we are proactively and transparently disclosing what we have discovered to the SEC,” Jobs said, according to Reuters. “We are focused on resolving these issues as quickly as possible.”

Apple spokespeople did not provide Reuters with a time frame for when the probe would be complete.

Related Links:

  • Apple Down on Analyst’s iPod Delay Prediction

  • Apple’s iTunes to Offer Movies for Download?

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