Apple stock option backdating scandal

02-Apr-2019 14:45

More than 100 companies are undergoing internal investigations or having their records reviewed by the Securities and Exchange Commission or the Justice Department to determine whether they manipulated stock-option grant dates to fatten their executives' potential payouts.

Options give holders the right to buy company stock at a set price, usually the price on the date the grant was made.

The internal investigation concludes just as Apple prepares for the holiday season, the most lucrative time of the year for its i Pod digital media players and Macintosh computers.

"I don't think (the investigation will) impact Apple in its direction and how Jobs drives the company," said Tim Bajarin, principal analyst at research firm Creative Strategies.

In August, Apple said that its options-backdating investigation had uncovered "additional evidence of irregularities" that would force it to restate financial results and postpone its financial report for its third quarter.

That prompted a warning from Nasdaq that Apple was out of compliance with the exchange's rules and could face delisting.

"I apologize to Apple's shareholders and employees for these problems, which happened on my watch," Jobs said in a statement. We will now work to resolve the remaining issues as quickly as possible and to put the proper remedial measures in place to ensure that this never happens again." Apple is the most prominent Silicon Valley company to be caught up in the options backdating scandal.

"That was everybody's fear," said Gene Munster, an analyst with Piper Jaffray.

"The bottom line is (Jobs) is not going to lose his job. It's a big sigh of relief for investors." Wall Street had little reaction to the announcement, which came after the close of regular trading.

Apple stock fell 58 cents to .80 in after-hours trading.

But is Jobs -- who also presided at Pixar Animation Studios, another company implicated in options backdating -- completely off the hook?

"I apologize to Apple's shareholders and employees for these problems, which happened on my watch," Jobs said in a statement. We will now work to resolve the remaining issues as quickly as possible and to put the proper remedial measures in place to ensure that this never happens again." Apple is the most prominent Silicon Valley company to be caught up in the options backdating scandal.

"That was everybody's fear," said Gene Munster, an analyst with Piper Jaffray.

"The bottom line is (Jobs) is not going to lose his job. It's a big sigh of relief for investors." Wall Street had little reaction to the announcement, which came after the close of regular trading.

Apple stock fell 58 cents to .80 in after-hours trading.

But is Jobs -- who also presided at Pixar Animation Studios, another company implicated in options backdating -- completely off the hook?

But the resulting investigation saw Apple's former financial chief Fred Anderson and ex-general counsel Nancy Heinen forced to settle with the SEC for a few million dollars apiece without admitting wrongdoing.