RSSGore Certifies Apple Board's Confidence in Steve Jobs
By Scott M. Fulton, III | Published December 29, 2006, 12:20 PM
In a statement accompanying Apple's delayed filing of its annual 10-K report with the US Securities and Exchange Commission today, following an internal audit to discover stock options-based accounting irregularities, the senior members of the audit committee - former US Vice President Al Gore, and former IBM CFO Jerry York - announced that the company's board of directors "has complete confidence in Steve Jobs and the senior management team."
It is an important statement from an important source, especially in light of news that broke just after Christmas from a California legal journal stating that the committee discovered Jobs received a backdated stock options grant that was erroneously recorded as having been approved by the board of directors, and that Jobs may have known the board was unaware.
In a full report attached to the company's delayed 10-Q filing for its fiscal fourth quarter of 2006, which was also registered today before the SEC's final deadline, the audit committee reports that two questionable grants were made to the Apple CEO during the period when backdating seemed prevalent, but that Jobs cancelled both grants prior to their being exercised, trading them instead for five million shares of restricted stock. Thus the committee's findings coincide with some of Apple's previous statements that Jobs did not benefit from backdated grants.
Last Tuesday's legal journal report indicated that a 2001 grant of 7.5 million option shares was improperly recorded as having been approved by Apple's board of directors. As the 10-Q statement reads, "The approval for the grant was improperly recorded as occurring at a special Board meeting on October 19, 2001. Such a special Board meeting did not occur. There was no evidence, however, that any current member of management was aware of this irregularity."
The key phrase here is "current member of management." Elsewhere in the report, that phrase is given extra weight: "The Special Committee also found that the investigation had raised serious concerns regarding the actions of two former officers in connection with the accounting, recording and reporting of stock option grants."
Those officers are not named in the report, though all indications point to former vice president and general counsel Nancy Heinen - who departed quietly last May - and former CFO Fred Anderson, who retired in 2004 and resigned from the board of directors last October.
The second questionable grant turned out to be not so questionable after all: A grant of 15 million option shares to Jobs was authorized on December 2, 1999. The terms of the grant were later finalized on January 12, 2000, though the unanimous authorization of the board was recorded six days later. The question was whether the grant date had actually been backdated by six days, but the committee determined that it actually wasn't.
Of 27,096 stock options grants made to Apple employees over an eight-year period, a total of 5,595 - over 20% - have improper measurement and grant dates, differing by as much as a single day. This little practice was responsible for $29 million in unrealized expenses. An additional 3,892 grants were made to new hires under what the report calls "The Monday/Tuesday Plan," which might not require any further description than the name alone. This plan incurred another $6 million in expenses that were never recorded until now.
Over an eight-year period, the audit committee determined that the cumulative impact of improperly recorded stock options grants on Apple's balance sheet was $84 million after taxes.
What does this mean for the corporation's bottom line? Not very much at all, as investors realized right away this morning. For the last complete fiscal year ending last September, Apple's net sales totaled $19.3 billion - a gain of 38.6% over the company's restated 2005 earnings. More importantly, net income rose by a larger percentage: a tremendous 49.8%, to $1.99 billion, a clear indication that reduced production costs for iPod in the wake of Apple's multi-component deal with Samsung truly have paid off.
Earnings per share rose from $1.64 in fiscal 2005 (adjusted) to $2.36, the news of which led Apple shares to rise 5% by mid-day trading Friday, making up for losses in previous days.
Is Steve Jobs out of the woods? A public proclamation made by the popular vote winner for President of the United States in 2000 certainly clears away much of the brush. Whether Jobs is implicated in any further action taken by the State of California or the federal government may hinge upon facts revealed in actions which first implicate Heinen and Anderson, although both were considered close friends of Jobs. Meanwhile, the Financial Times revealed this morning that the SEC is currently investigating Pixar -also chaired by Steve Jobs - for possible stock options backdating irregularities there. But tens of millions of iPods may be sold in the intervening period between now and when that investigation turns up actionable evidence.
On final comment, I swear on my half-brother's slutty wife. Read these 2 articles from Fortune 500 mag:
http://money.cnn.com/200...?postversion=2007010310
http://money.cnn.com/blo...ve-jobss-premature.html
now back to my half-brother's slutty wife.
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|I miss PC_Tool. He/she/it is the only one with a sense of humor.
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|Not only is Gore an expert on global warming and the inventor of the internet, now he is an expert on all the ins and outs of options. What a Brilliant man.
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|And if you watched a South Park episode, he is so "serial" about things he says.
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|You people don't get it. This is clearly another instance of one rich person approving the crimes of another. Don't ya know? Laws don't apply to rich folks, just to people who work for a living, unlike Jobs.
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|As far as OS's go, I could care less. Each has it's pluses and minuses. But, at least Gates has used his billions to help the poor. Also, less we forget, Jobs was a major contributer to Al Gore's 2000 campaign. Can anyone say, "possible conflict of interest"?
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|"Jobs was a major contributer to Al Gore's 2000 campaign. Can anyone say, "possible conflict of interest"?"
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Actually, no, and how you make that conclusion is laughable at best.
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|Tom A? I assume the A stands for A**. Our governemtn is corrupt and Jobs would not make a sizable contribution to Al Gore id he didn't expect something in return. Your naivity is astounding. and notice I said possible. I voted for Al gore and Kerry but that doesn't mean i don't realize that money talks and bullsh** walks.
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|Now that Al Bore has spoken, I feel so relieved.
I'm curious to see how he feels now that "Global Warming" has been attributed to his non-stop blathering. :)
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|I like Al-Gore--I mean, who else has given us so many political jokes? First he invented the internet, and now he apparently owns part of Apple :)
(please note I make the internet joke out of non-hateful fun. I've said something before that later I heard back and it sounded as if I claimed I knew God better than anyone in the forum--even though I totally did not mean to say or even imply that--so Gore IMO didn't truley think he owned the whole internet, he just slipped up. Nevertheless it is quite funny :)
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|Al Gore never stated he invented the internet - it was an overzealous Bill Clinton who made the remark - the media ran with it - Clinton was kidding anyway.
Instead of making jokes the media - that is - maybe they could just could just pay attention to the seriousness that Mr. Gore is sharing.
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|Incorrect - it was not Bill Clinton "joking". On March 9, 1999, Gore said in an interview with Wolf Blitzer:
"During my service in the United States Congress, I took the initiative in creating the Internet."
Did he say "invented" - no. But he did say "creating".
http://www.cnn.com/ALLPO...nscript.gore/index.html
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|There's a big difference between "create" and "invent". Gore supported several critical bills that jump started the 'net as we know it today.
So even if "create" is also not the right word, so what?
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|It's funney, that was my point.
Seriously, it isn't bashing the guy, just like it isn't bashing Bush by saying he is giving us sublimibinal messages :XD
Just like the Late Show made fun of Bush in 2000, portraying him as flipping the switch for the electric chair eliminating all Democratic opponents (then laughing), calling Al vs. Bush the "Exaggerater vs. The Eliminater" (funney how quickley that whole death penalty issue in 2000 is so insignificant today--well, until Sadam's hanging I suppose, but let's flee from discussing that issue right now).
It's all just harmless silly stuff IMO. Now, there is also dirty politics such as claiming Bush is the #1 terrorist and such--this sends the wrong message to other nations.
Okay I keep leaving the topic...I need a "subject checker" button that prevents me from typing once I stray from the topic at hand (heh)
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|so what does Al Gore have to do with Apple?
......Gore is an IDIOT
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|While that may be true, it does not mean he has to be wrong here.
Believe me, one of the last people I would trust in politics is Gore, but I believe him to be correct in this case--really because Steve Jobs is not an idiot, and he would not risk destroying what he worked so hard to re-build...he's a cut-throat business man, but not a cut-throat make $100 million and leave your company behind to burn type of guy. IMO, he actually cares more about his company than he does making an extra million dollars a year--but that's just me.
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|Actually, whatever you may think of Gore's political views and/or his presentation style, he's certainly not an idiot.
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|I can agree there. Gore is arguably even more intelligent than Bush is as far as I.Q., but then again, Joseph Stalin and Adolf Hitler weren't dumb people (as far as 'smarts' goes), just incredibly misguided. (bah, here I go again)
Gore is certainly not an idiot, agreed.
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|Well said Foxfyre. With golden parachutes that theses high level execs have, they don't have to obey the lay or do well and still make a killing unlike the poor slaves that work for them. All one has to do is compare the American compensation package to execs to that of the Japanese and, besides the Japanese building a better product, and you see why there is an "us versus them" mentality in the American workforce.
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|Gee, I feel better now!
I like the Mac, but let's face it - Jobs is an elitist. And Apple would be better served if it actually educated its market and marketed its products to the rest of us instead of selling image.
But, be that as it may, you don't jail someone on the basis of attitude.
And as if Gore's opinion matters one way or another! Who cares!?
What would be nice is if the rules that seem to have caught SO many companies in the web were clarified and made more transparent - and if we simply waited for the actual results of the investigations rather than run about like chickens with our heads cut off jumping to conclusions based upon speculation, innuendo and asinine pronouncements of faith by inconsequential politicians such as the one who himself failed to suspect contributions given via Buddhist monks!
Not to mention the absurd general state of corporate governance where CEOs are increasingly being given absolutely absurd rewards totally out of proportion to their actual contributions!
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|Al Gore is a great guy (remember an Inconvenient Truth). But, don't even mention IBM because we know where they stand (or are capable of) with Apple.
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|"Al Gore is a great guy (remember an Inconvenient Truth)"
Politics aside, you will likely get hammered for that statement unfortunately. Yeah, I personally don't care for the guy--but everyone is entitled to their opinion. I'm just saying that other people that don't like the guy might flame you for no reason, so 'm jurst warnin' ya to put yer fire-retardant suit on :D
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|Exactly why I waited before making judgements...
...Not that I trust Gore or anything, but Steve would be an idiot to have done what he was accussed of doing...why? He didn't NEED to; he, like Bill, already make more than they could spend on themselves--they're in this for the business and money is just part of that. Bill and Steve would have retired years ago if they were only after money. I'm sure that money was part of it, but the reason they are staying is because they either truly care about their companies or they wish to appear to care for their companies, so why would Steve work so hard to build something up and then risk destroying it? No, he may conceivably break rules to protect his company's image, but not just to give his company money. Image is everything for these guys.
That's my opinions on this issue, anyway. Al-Gore's statements, in-and-of themselves mean very little to me, but that does not mean that he is automatically wrong either.
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|Al Gore ?WHO? Oh yes The guy who invented the internet.... and the guy who claims the blizzerd in Colorado is caused by Global Warming
and all the polar bears are gonna die from no ice at the north pole ...............
bla bla bla .......
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|Agree here bourgeoisdude....
now about Al Gore....there's someone I respect and admire (yeah right ;-) From my point of view, I can't think of another public figure in my lifetime who spews out more garbage...
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|"Al Gore ?WHO? Oh yes The guy who invented the internet.... and the guy who claims the blizzerd in Colorado is caused by Global Warming and all the polar bears are gonna die from no ice at the north pole"
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Einstein you are not. Fact of the matter is, Polar bears are dying and much has to do with the ice flow. Whether you believe or not is immaterial.
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|Einstein you ain't not neither... In some areas polar bear population is DEcreasing, and in other areas it is INcreasing. The only way environmentalists will be happy is when humans revert to hunter gatherers, and only 50,000 home sapiens are left. Al Gore is a good example of their Luddite theories.
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