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Apple's Special Committee Reports Findings of Stock Option Investigation

Back in August, Apple announced they had found some stock option irregularities and launched an internal investigation to get to the bottom of things. This voluntary audit netted a warning of de-listing from NASDAQ because they had to delay filing their Q3 earnings results (fortuately, NASDAQ cut Apple a break). Today, the big fruit has issued a press release with the findings of this audit, which was performed by a special committee of outside directors, independent counsel and accountants. This crack team had to shuffle through over 650,000 emails and documents (Spotlight to the rescue!), as well as conduct over 40 interviews of current and past employees.

In summary, the investigation's results go a little something like this:
  • No misconduct by current members of Apple management was found
  • The most recent evidence of 'irregularities' points to 15 stock option grants made between 1997 and 2002. Said grants were apparently issued before their approval dates
  • Steve Jobs knew about the grant dates, but he apparently didn't know about the slight-of-hand accounting implications, nor did he benefit from any of them
  • The data found 'raises serious concerns' of two former officers related to the accounting, recording and reporting of these grants. Apple will provide details to the SEC
Mr J is quoted apologizing to Apple's shareholders and employees for these problems, especially since they happened under his watch, saying "They are completely out of character for Apple." He continues saying "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," i.e. - somebody's in for a whole lotta iButt woopin'.

In the collateral damage department, Fred Anderson, Apple's former CFO from 1996 to 2004 who now serves on the company's board of directors, has decided now might be a good time to resign from said board.

Finally, Apple and the audit committee agree that the company will ultimately have to restate their historical financial statements to "
record non-cash charges for compensation expense relating to past stock option grants." At this time however, the company is still working to analyze their findings and determine which periods will need restating, as well as the differential amounts.

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