In the wake of its backdated stock-options troubles, Apple Inc is offering affected employees the chance to amend the strike price of past options that were incorrectly backdated and receive cash payments to cover related losses and tax penalties, according a regulatory filing on Friday.
Fewer than 100 employees are eligible for the offer, Apple spokesman Steve Dowling said.
Apple said it sent an e-mail to the affected employees, offering them the chance modify the exercise price of their options, aligning them with the correct grant dates instead of the earlier dates that were erroneously recorded to achieve a lower exercise price.
The company would pay to cover the difference, Dowling said.
For employees who could face additional taxes because they exercised the misdated options after 2005, Apple is offering to cover the tax repercussions, he said.
Because of Internal Revenue Service rules, the offer does not apply to Apple officers such as chief executive Steve Jobs. Jobs voluntarily cancelled his outstanding stock options, Apple said.
Jobs has been questioned by US federal investigators as part of a probe into the granting of stock option awards at the company.
Apple has said that Jobs was aware of irregular backdating of stock options for some executives, but that he did not personally benefit from the awards.
Apple is one of dozens of companies under federal scrutiny over the backdating of stock options, the practice of pegging a grant date to an earlier, lower point in the company's stock price so the recipient could receive a larger windfall in the future.
Other technology firms, including McAfee and CNET, have also been roiled by the federal probe into the granting of stock options at more than 100 companies.
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.
Executives 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.
Apple's internal three-month investigation last year looked at 42,077 stock-options grants made on 259 dates from October 1996 to January 2003. Of those, 6,428 grants on 42 dates were found to be not dated properly, Apple said.
In Friday's filing with the Securities and Exchange Commission, the Cupertino-based maker of iPod players and Macintosh computers said the value of the affected stock options under the offer was US$67,142 as of Tuesday. The offer is valid until April 16.
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