Apple backdating stock options
All stemming from the practice known as “options backdating.” Options backdating occurs when a company issues stock options on one date, but reports in its financials an earlier issue date to create a “strike” or exercise price equal to the earlier date’s lower price.Another consequence is that the company underrepresents the real nature of an executive’s compensation, perpetuating the myth that options are performance-based incentive compensation."In the SEC statement, it said it would not bring charges against Apple based in part on its swift, extensive and extraordinary cooperation in the commission's investigation," Apple spokesman Steve Dowling said.
However, Apple says there are "serious concerns" surrounding actions taken by two former officers in connection to the problems.
Under previous regulations, corporations could wait 45 days or, in some cases, over a year to report options, thus providing ample time for backdating.
Other similar practices are being reviewed by government officials as well.
Apple Computer has concluded an internal investigation into backdated stock options and found that while CEO Steve Jobs was aware of the practice, he did not personally benefit from it.
Over the summer, we learned that Apple had engaged in backdating and springloading stock options in an attempt to increase the value of stock option grants.
Fifty-two companies currently under criminal investigation. Moreover, the company avoids having to expense the options as current compensation, thus increasing earnings in the near term.