Former Apple CFO Points Finger At Jobs Over Backdated Stock Options

by Glen Shapiro, LawAndTax-News.com, New York

27 April 2007

Former Apple Computer Chief Financial Officer, Fred Anderson this week stated that he had warned the company's chief executive, Steve Jobs of the the implications of backdating stock option grants for several key Apple executives.

In October 2006, Apple announced that a special committee of its board of directors, together with independent counsel and accountants, had examined more than 650,000 emails and documents, and conducted interviews with more than 40 current and former employees, directors and advisors.

Apple initiated this investigation after a management review discovered irregularities in past stock option grants.

The investigation's key findings were that:

• No misconduct by any member of Apple's current management team was found;
• The most recent evidence of irregularities related to a January 2002 grant; and
• Stock option grants made on 15 dates between 1997 and 2002 appeared to have grant dates that preceded the approval of those grants.

In a few instances, the internal probe stated, Mr Jobs was aware that favorable grant dates had been selected, but he did not receive or otherwise benefit from these grants, and was unaware of the accounting implications.

"I apologize to Apple's shareholders and employees for these problems, which happened on my watch. They are completely out of character for Apple," the company's co-founder announced at the time, continuing:

"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."

Following a $3.5 million settlement agreement reached between Mr Anderson and the Securities and Exchange Commission regarding his role in the matter, and the US financial regulator's decision not to bring enforcement action against Apple, the former CFO has argued that Mr Jobs was in fact aware of the accounting implications of various discrepancies in the timing of the granting of stock options to Apple's top brass.

However, the firm's board has closed ranks around the Apple boss, and earlier this week released the following statement:

"We are not going to enter into a public debate with (former Apple CFO) Fred Anderson or his lawyer. Steve Jobs cooperated fully with Apple's independent investigation and with the government's investigation of stock option grants at Apple. The SEC investigated the matter thoroughly and its complaint speaks for itself, in terms of what it says, what it does not say, who it charges, and who it does not charge. We have complete confidence in the conclusions of Apple's independent investigation, and in Steve's integrity and his ability to lead Apple."

A Justice Department probe into the matter is reportedly ongoing.

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