RealTime IT News

Apple Joins Widening Stock Option Probe

UPDATED:

Apple   has joined a growing list of companies to find themselves involved in a widening probe into controversial practices involving stock option grants.

In this case, the investigation is about grants to CEO Steve Jobs.

As a result of an internal investigation that uncovered irregularities in stock options granted between 1997 and 2001, the Cupertino, Calif.-based computer maker announced outside that Apple's directors have hired an independent counsel to investigate options granted between 1997 and 2001.

Jobs was one of the recipients of a stock grant which the Wall Street Journal estimated at 10 million shares.

The stock jumped 30 percent soon after the grant, according to the press report. Apple, in a statement, said the grant was canceled, resulting in no financial gain for the company's CEO.

"We are focused on resolving these issues as quickly as possible," Jobs said in a statement posted on Apple's Web site. The CEO said it "pro-actively and transparently" disclosed its findings to the Securities and Exchange Commission (SEC).

An SEC spokesperson contacted by internetnews.com had no comment.

In related news, CA reported it yet again will delay filing its annual report. A review of its stock options from fiscal years 1997 through 2001 found it had not reported stock options in a “timely manner.”

The company additionally reported to the SEC it understated revenue from software license subscriptions prior to fiscal year 2006 of $40 million. In May, CA said it would delay its fourth quarter and full fiscal year 2006 earnings report.

Often seen as vital to recruit and maintain executives, stock option grants came under the spotlight following a survey by the Center for Financial Research and Analysis, an independent research provider. The survey found that backdated options could run afoul of security laws.

As internetnews.com has previously reported, the practice was prevalent during the heated dot-com boom years when stocks flew high and executive talent came at a premium. The 2002 Sarbannes-Oxley Act, in the wake of accounting scandals at Enron and (then-named) WorldCom, targeted the practice by requiring companies to expense the stock options.

The probe has been spreading throughout the past few months. Earlier this month, both RSA Security and job site Monster.com revealed they were federal targets of probes into stock options.

In May, Sycamore Networks, also the subject of an SEC probe into the practice, was forced to restate financial results for 2000 through 2004, and the first half of 2005, following its own internal investigation involving option grants.