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Apple gives Jobs vote of confidence

Apple Computer CEO Steve Jobs walks in front of iPods playing different movie clips during an Apple event in San Francisco in September. PHOTO: AP

Apple Computer Inc restated its prior earnings on Friday following a months-long internal probe into stock option awards, and issued a vote of confidence to chief executive Steve Jobs.

Apple said "incorrect measurement dates" were applied to certain stock option grants stretching back to the mid-1990s, but that Jobs did not "receive or financially benefit from these grants."

The company has notified the Securities and Exchange Commission (SEC) of the findings by a special committee, chaired by former US vice president Al Gore, set up to probe the awards.

As a result of its findings, Apple said it was now recognizing additional non-cash stock-based compensation expenses of US$84 million after tax dating back to 2004.

The findings did not affect its fiscal year 2006 net profits which ballooned to US$1.99 billion, largely on booming sales of its computers and popular iPod digital music players.

Apple said in a securities filing that "there is a risk the company may have to further restate its prior financial statements, amend prior filings with the SEC, or take other actions not currently contemplated," if regulators disagree with its findings.

The company, however, expressed its backing for Apple co-founder Jobs.

"The board of directors is confident in Steve Jobs and the senior management team," Gore said in a joint statement with Jerome York, chair of Apple's audit and finance committee.

Gore has sat on Apple's board of directors since 2003.

Some 140 companies are being investigated for possible stock option irregularities, including many of the 40 Silicon Valley companies that are conducting their own probes.

The backdating of stock options is not illegal itself, but it is improper to manipulate the date on which stock options are awarded or to grant such rewards without disclosing them to shareholders in security filings.

Individuals could reap bigger rewards cashing in stock options if the date on which they were granted is manipulated to when a company's share price was at its lowest.

Such rewards have long been used legitimately by US companies as a performance incentive for top executives.

Apple filed its latest quarterly and annual earnings reports on Friday having originally been due to file its annual report on Dec. 15.

The company had said previously that Jobs had been aware of irregular backdating of stock options for some executives, but that he did not personally benefit from the awards.

But the company said on Friday that one of two stock option grants made to Jobs, on Oct. 19, 2001, was "improperly recorded as occurring at a special board meeting on Oct. 19, 2001."

"Such a board meeting did not occur," Apple said, while stressing that "there was no evidence, however, that any current member of management was aware of this irregularity."

The firm said its restatement was tied to stock option grants made between 1997 and 2002. Its accounts are audited by KPMG.
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