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Hoping to end the stock options backdating scandal that has dogged it for months now, Apple (Nasdaq: AAPL) 
Friday filed a delayed annual report with regulators, said it would take an US$84 million charge to recognize changes in option values and said an internal investigation found CEO Steve Jobs did not benefit from the stock dating shenanigans.
Apple said Jobs was aware that some options backdating had occurred, but had not personally gained financially from such activity. It also said that the board and investigators had "complete confidence" that current management would refrain from the practice going forward.
The report came at the end of a wild holiday week for Apple, as the company rode a roller coaster driven by a barrage of reports suggesting the stock options scandal could implicate and taint Jobs, high stakes for a company that relies on its CEO as its public face like few others do.
On Tuesday, a report said he had hired a personal attorney to work on the options case. A day later, the Financial Times of London reported that a key stock option grant to Jobs had been issued without board authorization and that documents suggesting the board had voted had been altered.
In its filing with the SEC, Apple acknowledged that was, in fact, the case.
Apple said the October 2001 grant of 7.5 million shares to Jobs came on a date when no board meeting took place. "The approval for the grant was improperly recorded as occurring at a special Board meeting on Oct. 19, 2001. Such a special Board meeting did not occur," Apple said. "There was no evidence, however, that any current member of management was aware of this irregularity."
Apple said its revised filing recognizes $20 million in charges for that options grant alone.
1 Million Documents
Apple shares rose nearly 5 percent in Friday trading to $84.74, reflecting investor optimism that the options issues would be behind Apple as it focused on new product rollouts and other initiatives heading into 2007.
The SEC is known to have launched its own inquiry into the stock options situation and reports have suggested that federal prosecutors may be investigating, as well.
Apple said it has turned over the results of its internal inquiry to all investigative bodies, including the SEC and the U.S. Attorney's office .
In its filing, Apple said its own investigation reviewed thousands of stock options grants and found that the "originally assigned grant dates for 6,428 grants on 42 dates are not the proper measurement dates."
The total additional expense from that difference amounts to $105 million before taxes and $84 million after taxes. Apple noted that some 35,649 grants did not require any adjustment.
Apple said a team of forensic accountants spent 26,500 hours reviewing some 1 million "physical and electronic documents and interviewing more than 40 current and former directors, officers, employees, and advisors" to arrive at its conclusions.
"Based on a review of the totality of evidence and the applicable law, the Special Committee found no misconduct by current management," Apple said. That committee was headed by former Vice President Al Gore.
Apple is one of many companies caught up in the options backdating fallout. Other companies have had CEOs resign and have been forced to take tens of millions of dollars in new charges to make up the difference between the stock prices on the falsified stock grant dates and the price on the dates the stock was truly given on.
Cnet, Broadcom (Nasdaq: BRCM) , McAfee , CA and Novell (Nasdaq: NOVL) have all acknowledged some degree of backdating in recent months.
Still, Apple, has garnered the lion's share of the headlines, in part because the options revelations came at a time when Apple was flying high, leveraging the success of its iPod and iTunes Music Store into more Macintosh sales , and making a run at its largest market share ever in the personal computer space.
Future Still Looks Bright
During Jobs' current -- and second -- tenure with Apple, he has helped turn the company around on the strength of the iPod, boosting the share price from around $10 to more than $80. Several analysts this week came out with predictions that Apple stock would be worth more than $100 per share in the new year, based on the assumption the options fracas would blow over before long.
It was not a surprise that reports suggesting Jobs was closely involved shook investors earlier in the week, since the company has not groomed a successor to the enigmatic leader, Enderle Group Principal Analyst Rob Enderle said.
"Whenever the top executive at a company is implicated in a scandal, it raises the stakes considerably," Enderle told MacNewsWorld. "In the case of Steve Jobs and Apple, that is magnified even further."
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