Apple to investigate stock option grant ‘irregularities’ made between 1997 and 2001

Apple today announced that an internal investigation has discovered irregularities related to the issuance of certain stock option grants made between 1997 and 2001. One of the grants in question was to CEO Steve Jobs, but it was subsequently cancelled and resulted in no financial gain to the CEO. A special committee of Apple’s outside directors has hired independent counsel to perform an investigation and the company has informed the SEC. Apple executives will refrain from commenting further on this matter until the independent investigation is concluded.

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

Press release here.

MacDailyNews Take: Uh, Wall Street really doesn’t like the term “irregularities” very much at all. “Proactively and transparently disclosing” will hopefully help matters for Apple.

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  1. Face,

    Basically, they have found that something has happened, like giving options RIGHT before a new product was announced, or giving people that didn’t actually work for the company employee options. Things like that are a HUGE no-no for a publically traded company. Hence, the SEC (Securities and Exchange Comission) has gotten involved. That is definitely NOT a good thing. The SEC has the power to help a company out, or bring it down. Hopefully they kept very, very good records on their actions.

  2. This may be the explanation for some of the departures in the last 6 months – as long as the Company is proactive in the investigation and it doesn’t touch Jobs (as appears to be the case) this has no impact on the stock – buy on the aftermarket weakness.

  3. Not much of a suprise here, really.

    The Securities Exchange Commission currently has a bug up their a** about stock options policies, and has investigations under way at at least 50 companies right now. I would say that the boards of every company granting options has “internal investigations” going right now, because they don’t want to be accused of covering anything up.

    BTW, this is an issue over a Microsoft as well.

  4. Cowboy,

    I wouldn’t say that this would have NO effect on stock. Investers are very shaky on this type of news and since Sarvane-Oxley reporting (Thanks, Enron!) guidelines have gone into effect, I think this will shake AAPL in the short term. It’s not going to tank, but it will be pretty volatile for the next couple of days, with a bearish tendency. Overall, it won’t be a big deal.

    Karl, I will agree, I guess the SEC isn’t involved yet, but trust me, once you “tell” them something… they’re involved whether you want them to be or not. At least Apple knows what could happen if they kept this quiet. While biting the bullet can really, really hurt up front, it is better that this is out in the open.

  5. “This may be the explanation for some of the departures in the last 6 months “

    Yet again another conspiracy theory about Apple. I wish people would put their government under such scrutiny. Perhaps then we’d get some real accountability.

  6. Summary – everyone wondered about why the General Counsel, and others, left without explanation – if she was part of any impropriety relating to options and was dismissed as a consequence there is little for the SEC to do. As long as Apple has cleaned its own house the SEC wont bother with them – they have too many other companies to investigate. That is why I think that this will have little impact (and creates an opportunity to buy any shares being dumped) even in the short term.

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