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Apple fesses up to Stock Backdating, CFO resigns

thestreet.com — Apple said late Thursday that stock options granted on 15 dates between 1997 and 2002 were apparently backdated, and though CEO Steve Jobs was aware of favorable grants, he didn't benefit personally and "was unaware of the accounting implications."

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  • tooslickvan, on 10/12/2007, -5/+24Some clarification: Fred Anderson, Apple's former CFO, resigned from the his current position as a member of Apple's board.
    • MrBabyMan, on 10/12/2007, -5/+8Noted. It seemed a little unclear at first glance. I had heard on the radio that it was a board member, but gleaned from this that it was the CFO.
    • JustinMMcKay, on 10/12/2007, -12/+12Oh lets all just wait and see how long it takes this to get marked innacurate...
    • threepio, on 10/12/2007, -9/+13Well, given that the current CFO didn't resign - a former CFO resigned from the board - technically it is inaccurate.
    • VaporBro, on 10/26/2007, -17/+2Apples and carmel are ***** amazing....The fruit you stupid stupid fanboy. Go back to your iPod...leave me and my Delicious Red to myself...
    • MrBabyMan, on 10/12/2007, -8/+5I understand the need for accuracy, but if this gets marked inaccurate based on a semantic (and admitted-- see above, I was not trying to mislead) missing "former" when the rest of the article is spot-on accurate, I'd question how anxious someone was to want to mark it inaccurate under any excuse.
    • xoineg, on 10/12/2007, -1/+2I believe that at one point this was legal, but in 2002 new laws made it illegal and force companies to come clean, so basically even if Jobs knew about it at the time he didn't have to worry about these issues. There are over 100 companies having the same problems including Microsoft. They are were doing this. Now, with this new laws they have to let everyone know that they did this or they'll get into deeper problems. At the end they are all going to just get a slap on the hand...That is how the system works.
  • mochaman, on 10/12/2007, -22/+4STOP!  this inaccurate tabloid headlines. 
  • streak, on 10/12/2007, -11/+23If Steve Jobs didn't know that improperly accounting for back-dated options was illegal, then why was he the only one not to profit from them? He actually did have earlier possession of improperly accounted, backdated options and, for unknown reason (because there was no identifiable benefit to him or Apple), he exchanged them for innocuous options years ago. My conjecture is he didn't originally know about the problem but he did find out about it years ago, kept it quiet, and made the options exchange to avoid being implicated later when the situation might be discovered. (Is there a statute of limitations on this?)
    • threepio, on 10/12/2007, -19/+15Thank you for your conjecture - however a indepth six month investigation has already asserted that you're incorrect. Keep the arm-chair financial analyzing to yourself - you're not very good at it.
    • ultimathule, on 10/12/2007, -11/+3Cool, but he seems to have you down for the grammatical count.
    • streak, on 10/12/2007, -2/+4@threepio, the investigation was 3 months (not 6), it was internal (not independent, which your use of "indepth" might be misconstrued to mean), and its conclusions remain consistent with my conjecture. For instance, the statement from Apple that Jobs did not know about the legal implications of the faulty accounting practices does not say when he learned of these implications, only that there was a time when he did not know. Apple is very careful about its use of language (as is Dick Cheney ;-). The question remains to be answered: what did Jobs know and when did he know it?
    • weareglass, on 10/12/2007, -1/+1From the article:
      "Apple reported the findings after a special committee of outside directors, lawyers and accountants completed its three-month investigation. The group examined more than 650,000 documents, including emails, and interviewed more than 40 current and ex-employees."

      Key word: OUTSIDE. The report was prepared for Apple by non-Apple employees. These would most likely have not been shills since at this point in time Wall Street is looking very carefully into this. This isn't politics, this is business. Apple had nothing to do with the report. Your conspiracy theories may need to be amended.
    • streak, on 10/12/2007, -0/+3The key operative here is that Apple paid the investigators, so it is an internal investigation. In fact, Apple would probably like you to know that this is internal, because as far as market pundits are concerned that says the government hasn't seen anything (yet at least) to warrant an (external) investigation. Nothing in such an internal investigation is under oath, by the way.

      No one has provided any reason for Jobs trading his improperly accounted shares for restricted shares. That trade just seems weird, doesn't it? I thought it at the time and I still think it.

      As far as a "conspiracy theory", that's your description, not mine. I'm only suggesting a possible cover-up. Why get so bent out of shape? Do you have some money on the line or something?
  • burke, on 10/12/2007, -12/+9Haha, wow. I read that as "CEO resigns". That seemed a little off.
    • Hyprtime, on 10/12/2007, -5/+19I don't know why this got marked down. The headline is misleading, since it implies that the story is talking about the current CFO. It should read "Apple fesses up to Stock Backdating, former CFO resigns from Board".

      To other Diggers, accuracy counts. Don't ***** on people who keep an eye on it.
    • lakawak, on 10/12/2007, -11/+3How does it imply that it is a current CFO? You may have inferred it, but it just says that the CFO resigned. A reasonable person would assume that the CFO during the period of the illegal activity is the one who resigned.

      The headline is not misleading. You are just too dumb to comprehend.
    • JoshuaGross, on 10/12/2007, -4/+2Because CFO looks like CEO. Have a sense of humour, geez....
    • totorototoro, on 10/12/2007, -2/+3Joshua, he's taking it waaay too seriously ;)
    • burke, on 10/12/2007, -2/+3umm, maybe I'll clarify. I just meant that I read "CFO" as "CEO", which would have meant Steve Jobs resigned. That would have been weird.
  • geniusj, on 10/12/2007, -17/+12Marked as inaccurate. The current CFO did not resign as this clearly implies.
  • lakawak, on 10/12/2007, -5/+15The CEO was "unaware of the accounting implications" of backdating stock options?

    I don't know which would be more disturbing, if he is lying, or if he is telling the truth about that.

    It'll be fun to see the digg spin placed on this. Somehow it will turn out to be a good thing that Apple did.
    • zybch, on 10/12/2007, -5/+1Well if he didn't know then he shouldn't have held the CFO position!

      Does the C in CFO stand for Complicit or Complacent?
    • NewChar, on 10/12/2007, -3/+5Great move by Apple, this was just done to hype up their upcoming Quicken-killer - "iCash." There will be no more financial snafuus with iCash, which is heavily integrated into iMovie and iPhoto. Coming to Mac OSX in January.
    • vitaboy, on 10/12/2007, -1/+4
      Given that backdating is not necessarily illegal, yes, Jobs could really have been unaware. Let's remember more than 100 Silicon Valley companies (including Microsoft) have investigations regarding stock backdating.

      The problem is, backdating is perfectly legal. The trouble is that proper disclosure is the key here. Companies can backdate stock options, as long as it is disclosed properly. Jobs may have assumed that such mechanical processes would be handled properly by then-CFO Fred Anderson.

      Also, we don't know the whole story yet. The announcement by Apple referred to misdeeds by two former executives who went unnamed. It's known that unscrupulous executives will work actively to pad their own fortunes by working directly with the HR department over "compensation issues." Apple had more than its share of revolving door executives who were only there to essentially raid the company (as former Apple employee Mike Evangelista has written about in his blog). So the backdating could have occurred behind Jobs' back and designed specifically to slip by CFO's radar.

      The full story isn't out yet, but this story isn't just about Apple, but virtually every big name Silicon Valley company.
    • streak, on 10/12/2007, -0/+1Hey, weren't most of us unaware of the technicalities of expensing stock options? The important question is, once Jobs learned of the illegality, what did he do about it? And that leads to the question of WHEN did he learn of the illegality. Was it just a few months ago... or was it years ago, just prior to when he traded his improperly expensed shares for (restricted!) shares that were properly expensed?
  • jetcopter, on 10/12/2007, -2/+7"In addition, the company announced that Fred Anderson, who served as Apple's CFO from 1996 to 2004, resigned from the company's board, believing it is in "Apple's best interests" that he go. " And leave the country before the SEC is after him.
  • manicdvln, on 10/12/2007, -4/+15I guess Apple isn't only innovative in products but with scandals as well. Think Different indeed!
  • D4r7h3v1l, on 10/12/2007, -9/+29iFraud

    (coming soon: the iFraud nano)
    • joeykilluv, on 10/12/2007, -5/+3Brilliant!
    • catullus, on 10/12/2007, -2/+9i'm sure jobs would prefer us to think it's just an iFraud mini
    • FluffyArmada, on 10/12/2007, -5/+2I bet it has bluetooth and a 30" screen.
    • postitnote, on 10/12/2007, -2/+11iFraud corporate shuffle.
  • Hyprtime, on 10/12/2007, -1/+14I wonder if his contract had a little sticker attached that said "Don't steal stock options."
    • grumpyrain, on 10/12/2007, -1/+5maybe the SEC could embed a small poem in the forms, backdating is not cool?
  • Slipdisc, on 10/12/2007, -2/+11unaware? come on
    Is that the best he could come up with?
    • totorototoro, on 10/12/2007, -2/+7he'll start waving around a new iPod to distract investors!
  • totorototoro, on 10/12/2007, -8/+7Peter Oppenheimer is Apple's CFO. He didn't resign. Digger had room on the title to put Ex-CFO RESIGNS (Fred Anderson), but just couldn't do it, right?
    • lakawak, on 10/12/2007, -13/+7He also had room to put CURRENT CFO resigns. But he didn't do that either.

      First of all, it is extremely sad that you even know who the current CFO is. But second of all, I think a reasonable person would assume that the peson resigning would bethe one that was in charge when the fraud happened.

      So the headline was perfectly accurate to everyone who doesn't have a really sad obsession with Apple and therefore doesn't know, nor give a ***** who the current or past CFO is/was.
    • totorototoro, on 10/12/2007, -7/+4relax, dude.
    • JoshuaGross, on 10/12/2007, -0/+11Heh wow. Apparently some people get really fired about who's the CFO at Apple.
    • pfranz, on 10/12/2007, -2/+10So if I make a headline that says, "The President was shot." You should know I was linking to an article on Lincon?
    • lakawak, on 10/12/2007, -8/+2pfranz...you can't be that dumb, can you?

      This article did not just say CFO of Apple resigns. It talked about something that happened in the late 90s. So it is very reasonable to assume hat somene resigning would have to do with being CFO THEN.

      To further your just plain horrible analogy...if someone posted a story about the Civil War, and then said the President was shot...would you think that it was Bush?

      Nope.
    • pfranz, on 10/12/2007, -2/+4What was the need to further my "horrible analogy?" If the article was about Lincoln--or the civil war--you would know which president from the context. Just like this scenario.

      My point was that it seems like sensationalism (well, either ignorance or malice) to be that vague in the heading. Not everyone has the time or interest to read each detail of everything. That is the point of a summary.
    • tolldog, on 10/12/2007, -1/+4@pfranz
      No, its obvious you are talking about Kennedy.

      --

      I agree, it was not clearly stated. I assumed the CFO was the same as when it all went down and that he resigned because of it. When really it was the Ex CFO that resigned from the board.

      I guess the thing about assumptions really is true.
  • kryogenix, on 10/12/2007, -2/+8I guess his scheme wasn't so well engineered after all.
    • burke, on 10/12/2007, -2/+6(scheme (is (very (well (engineered (, (what (are (you (talking (about (?))))))))))))
  • thewebguy, on 10/12/2007, -0/+8if anyone else was wondering what backdating was: http://www.google.com/search?q=define%3Abackdating
  • Chesh, on 10/12/2007, -10/+13Apple fans mark this as inaccurate in 5...4...3...
    • MisterCookie, on 10/12/2007, -6/+16If MS pulled this crap, there would be calls for Congressional hearings, mass boycotts, anti-trust bans...An apple guy commits it and I bet this will disappear in 3 days after a wave of new mac product speculation.
    • tzon, on 10/12/2007, -5/+4ignore
    • timmarhy, on 10/12/2007, -1/+5sometimes it's easier to just ignore and keep your ignorance then admit apple are corperate ass's just like the rest of american corperate culture..
    • weareglass, on 10/12/2007, -0/+1IF Microsoft pulled this crap, hm....

      http://busmovie.typepad.com/ideoblog/2006/06/backdating_micr.html

      Oops! Guess the Microsoft story about backdating wasn't Dugg...
  • VanillaBaron, on 10/12/2007, -6/+5The story and the article and the synopsis are all 100% accurate. Also, the headline is not inaccurate, no matter what anyone claims.

    Misleading? Maybe - you might think so, others might not, that's a value judgement, not a hard-and-fast provable or disprovable fact. "Inaccurate" applies to something presented as a fact, it has no meaning in terms of value judgements.

    "Inaccurate" means provable as wrong. You can not PROVE that something is misleading, because it is a subjective notion.

    People confusing the terms, "misleading" and "inaccurate" is just yet another reason for the whole "mark as inaccurate" thing to be abandoned.
    • weareglass, on 10/12/2007, -0/+2Let's simplify this. Does the sentence "Apple CFO resigns" make you think about the current CFO, or one of the dozens who have held the position in the past?
    • VanillaBaron, on 10/12/2007, -0/+1It's not that simple. Does putting an "inaccurate" label next to the story make people think that the article, headline and synopsis are all inaccurate; or do readers somehow divine that there's actually only an error with the tense of one part of the headline, and that the story and article themselves are true?

      The first comment made the clarification, so it seems to me to be harsh to mark it, which would cause people to ignore the story if it received enough marks to be labelled.
  • cannibaljp, on 10/12/2007, -10/+2i'm an Apple fan if ever there was one - and this does nor need to be marked as anything.

    dugg. because it finally lets us know where Apple stands with these investigations, and that is great news.

    now apple can focus on doing what they do best.
    (tell me that statement isn't an invitation for the Anti-Apple kids to pipe up...)

    i'm hoping for some nice new announcements from Apple to help rebuild / refocus the wall street opinion.
    • CBTF, on 10/12/2007, -4/+7"dugg. because it finally lets us know where Apple stands with these investigations, and that is great news."

      Lmfao. Again, apple can do no wrong here on digg..

      If this were MS, this would have 8000 diggs and bashers would be everywhere. But with apple, it's constructive.
    • timmarhy, on 10/12/2007, -1/+2and yet more proof by you and i being dugg down.
  • grumpyrain, on 10/12/2007, -0/+6By definition, any CFO who resigns is an ex-CFO. But agreed, the title implies that the guy resigned is Peter Oppenheimer (the current CFO) instead of Fred Anderson (the guy actually implicated).

    I don't think anyone buys that Jobs "was unaware of the accounting implications". You don't become CEO of Apple without having the brains to ask some serious questions when someone suggests that you just backdate some stocks. Sure he was unaware of ALL of the implications, but you can't convince me he thought it would be all above board.
    • totorototoro, on 10/12/2007, -0/+3grumpyrain,
      yeah, i wonder if this really ends here with a "sorry, happened on my watch, won't happen again." companies like brocade had indictments filed over the backdating issue.
    • grumpyrain, on 10/12/2007, -1/+5time will tell. What worries me is some comments of people who honestly believe that Apple can not do evil. They have done the right thing by getting the audit, and hopefully those who did wrong will be brought to justice over it. The day we think any company is above the law is a very sad day.
  • noreturn, on 10/12/2007, -3/+6Dugg by Apple fanboy.

    Sure the title may be misleading (and it is), but it's still good information. By the way, If I told you that the President just resigned, would you think I meant Bill Clinton? I didn't think so.
  • jarinudom, on 03/31/2008, -7/+3Boy, talk about a pointed digg title and description... Looks like someone is an anti-Apple crusader hehe
  • buryme, on 10/12/2007, -2/+6Stop it now, this is clearly Microsoft's fault.
  • robert94087, on 10/12/2007, -3/+4Apple's one of the most dishonest companies around.
  • letterten, on 10/12/2007, -2/+4former CFO Fred Anderson and now ex-board member. so far, CFO Peter Oppenheimer has done nothing wrong.
  • vitaboy, on 10/12/2007, -1/+3
    The headline should be corrected to refer to former CFO Fred Anderson. The current CFO is Peter Oppenheimer.
  • VaporBro, on 10/26/2007, -3/+2Myyyyyyyyy names Diggggggggg and I like Appppppppppple....
  • Tilneys, on 10/12/2007, -1/+2Whoever created this article needs to be more careful. Peter Oppenheimer will not be happy with headlines saying he has resigned when he hasn't done anything of the sort.

    Classic over-enthusiastic amateur journalism that would have you fired from a serious publication in 5 minutes. And the excuse the author gives of, "I didn't intend to mislead" is just not good enough.

    "You're fired!"
  • lennyman, on 10/12/2007, -0/+1Come on, everyone knows that Bill Gates forced apple to do this, Although Rumsfeld and cheney were the ones who came up with the idea.
  • jdgiotta, on 10/12/2007, -0/+1Some how I think this won't get "dugg" as much as the M$ or Sony inaccuracies.
  • djadul, on 10/12/2007, -0/+1For those who do not understand what backdating is

    http://www.biz.uiowa.edu/faculty/elie/backdating.htm
  •  

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