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Apple exonerates Jobs in options backdating flap

By ASSOCIATED PRESS
Published December 30, 2006

SAN JOSE, Calif. - Apple Computer Inc. gave the most detailed account yet of its stock-option practices Friday, clearing CEO Steve Jobs and other current executives of any misconduct. Yet it still isn't clear who was responsible and how much Jobs was involved.

And while Apple has concluded its own probe into the backdating scandal, Jobs and others aren't necessarily cleared of any civil or criminal actions. The Securities and Exchange Commission and the U.S. Attorney's Office have yet to publicly comment on whether they are investigating the matter.

Apple said Friday it has given the results of its review to the federal agencies and responded to their "informal requests" for documents and additional information.

The Cupertino-based maker of iPod portable media players and Macintosh computers is among the most prominent of some 200 companies under scrutiny for backdating stock options. It's a widespread practice, especially in Silicon Valley, that involves pegging stock options to favorable grant dates in the past to boost the recipients' award.

The manipulation itself isn't necessarily illegal, but securities laws require companies to properly disclose the practice in their accounting and settle any charges that may result.

In a filing Friday with the SEC, Apple said Jobs was aware of or recommended the selection of some favorable grant dates but he neither benefited financially from them nor "appreciated the accounting implications."

The company exonerated Jobs and current management but said there are "serious concerns" with the stock-options accounting actions of two former officers, whom Apple did not name.

Two outside directors - former Vice President Al Gore, who chaired the special committee that conducted the probe, and Jerome York, chair of Apple's Audit and Finance Committee - said in a joint statement they had "complete confidence" in Jobs and the senior management team.

At the same time, Apple acknowledged the backdating of thousands of option grants and restated past earnings - albeit with relatively minor adjustments - because of the probe.

Experts say the company's own clearance of misconduct doesn't provide the final word.

"The question is not merely one of whether Jobs benefited or not, but also one of whether Jobs was involved in the backdating of documents, or providing investors with misleading or incomplete disclosures," Lynn Turner, a former chief accountant for the SEC, said in an e-mail Friday.

[Last modified December 30, 2006, 00:00:09]