Excerpt from our One-Page Annotated News Summary:
Jobs Knew Apple Manipulated Some Option Grants (Wall Street Journal)
Summary: Apple (NASDAQ:AAPL) released a statement yesterday reporting findings of an internal investigation on its option grant practices. The statement indicated that Steve Jobs knew that some of its options grants were manipulated, but that neither he nor any other existing members of management were guilty of "misconduct" in these grants. Apple's statement did not address whether Steve Jobs was aware that backdating is wrong, how many cases of backdating occurred, and what the board's role was. The behavior of two former executives--unnamed in the statement--raised "serious concerns" in Apple's internal probe. On Saturday night, former CFO Fred Anderson resigned from the company's board to "avoid even the appearance of any conflict of interest". While Steve Jobs did not have options in Pixar, executives there were granted options at lows in the share price at the time when he was chairman. Aitan Goelman from Zuckerman Spaeder LLP estimates that there are "infinitesimal" chances Steve Jobs will face criminal prosecution, however he did not rule out the possibility that he'd face civil action from the SEC.
Related links: Full WSJ article • Updated WSJ Options Scandal Scorecard • Apple's Press Release on Options Investigation Findings • Options Backdating Hits Cupertino • Apple's Options Problems Deepen - Likely To Restate Results • Cost of Options Backdating • Editor's note: On June 30th, David Jackson wrote: "Apple is the highest profile stock so far to be hit by the options scandal. The risk for investors isn't only the reputational damage and potential fines; it's that CEO Steve Jobs may be forced to resign if it is proved that he knowingly took an option grant at below market prices. The stock impact would be dramatic because Mr Jobs has been responsible for turning around Apple over the last few years."
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