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Apple Is Warned, But Jobs Is Cleared of Misdeeds

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Apple Is Warned, But Jobs Is Cleared of Misdeeds


Apple Is Warned, But Jobs Is Cleared of Misdeeds

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  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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From NPR News, this is ALL THINGS CONSIDERED. I'm Melissa Block.


And I'm Robert Siegel.

Apple Computer said today it will take an $84 million charge against its earnings in connection with the so-called backdating scandal. Apple is one of dozens of companies that had been investigated for backdating stock options to maximize their value to executives and other employees. But in a development that made a lot of investors happy, Apple said that's founder and CEO, Steve Jobs, has been cleared of any deliberate wrongdoing in the matter.

NPR's Jim Zarroli reports.

JIM ZARROLI: Last October, Apple admitted that some of the stock options granted to employees and directors had been backdated and it appointed two board members to look into to what happened. They included former Vice President Al Gore.

Today, the company filed documents with the Securities and Exchange Commission flushing out the matter. Apple said that a number of stock options had been backdated between 1997 and 2002. That included options awarded to Apple's iconic founder, Steve Jobs, and the committee said Apple had insufficient safe guards to prevent manipulation of options.

But the company said there was no evidence that Jobs have benefited financially from the transaction or that he fully appreciated the accounting implications. It also said the committee has found no evidence of wrongdoing by Jobs or any other current executives. The report sent Apple's share price soaring.

Rob Enderlyis a technology analyst.

Mr. ROB ENDERLY (Technology Analyst): From the standpoint of the investors, the only time they get nervous is if Steve Jobs is actually put at risk, and soon as that risk seems to go down, the stock seems to go up.

ZARROLI: But Apple is not out of the woods yet. Backdating takes place when a company changes the dates when stock options are awarded in order to make them more valuable to recipients. The practice isn't illegal unless somebody tries to conceal it from investors. U.S. officials have been investigating dozens of companies for backdating and have already filed charges against executives at two.

Today's filing is an attempt by Apple to show that it's on top of the matter. The company said investigators spent more than 26,000 hours investigating the issue, looking at more than a million documents and interviewing some 40 witnesses. And the company said it was confident that it had corrected the problems that led to the backdating.

But Patrick McGurn of Institutional Shareholders Services says federal officials could end up seeing the evidence differently.

Mr. PATRICK MCGURN (Institutional Shareholders Services): There's not going to be charges that the board has not thoroughly investigated these issues. The real question going forward is whether the FCC or potentially prosecutors or others will agree with their conclusions.

ZARROLI: Apple did acknowledge that it had serious concerns about the accounting actions of two former officials. The company didn't identify them or say what they might have done. But press reports have identified one of them as former chief financial officer Fred Anderson. An attorney for Anderson said today that he played no day to day role in the granting of options. And the attorney said Anderson was unaware of any improprieties.

Jim Zarroli, NPR News, New York.

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