Apple Computer Inc. CEO Steve Jobs apologized Wednesday for the company’s past stock-option practices after an internal investigation found accounting irregularities between 1997 and 2002 and showed Jobs was aware of some options backdating.
The iPod and Macintosh maker said its three-month investigation also prompted the resignation of former Chief Financial Officer Fred Anderson from the company’s board of directors.
The company said Jobs knew that some grants had been given favorable dates “in a few instances,” but he did not benefit from them and was not aware of the accounting implications.
“I apologize to Apple’s shareholders and employees for these problems, which happened on my watch,” Jobs said in a statement . “We will now work to resolve the remaining issues as quickly as possible and to put the proper remedial measures in place to ensure that this never happens again.”
Apple said it will likely have to restate some earnings as a result. The looming restatements threaten to wipe out some of the profit generated during the most prosperous stretch in Apple’s 30-year history as millions of consumers snapped up the company’s ubiquitous iPod. Apple has reported a total of $3.1 billion in profit over the past four years.
Shares of Apple shed 57 cents to $74.81 in aftermarket trading after closing up $1.30, or 1.8 percent, on the Nasdaq Stock Market on Wednesday.
Apple, one of the most prominent companies caught in the nationwide stock options mishandling scandal, said its investigation into the matter did not uncover any misconduct by any member of Apple’s current management team, but that it did raise “serious concerns” regarding the actions of two former officers.
The company did not name the two officers but announced that Anderson, who served as the company’s chief financial officer from 1996 until 2004, had resigned from the company board. Apple said it will provide all details of their actions to the Securities and Exchange Commission.
Apple spokesman Steve Dowling refused to elaborate beyond Wednesday’s prepared statement.
The probe found irregularities in the recording of stock option grants made on 15 dates between 1997 and 2002, with the last one involving a January 2002 grant, the company said. The grants made had dates that preceded the approval of those grants.
The company’s special committee conducting the investigation examined more than 650,000 e-mails and documents, and interviewed more than 40 current and former employees, directors and advisers.
Apple initiated the stock-options investigation in June after problems at other companies began to unravel.
More than 100 other companies nationwide are entangled in similar stock-option trouble. In most of those instances, companies have traced their problems to “backdating” issues.
Under this practice, insiders could make the rewards more lucrative by retroactively pinning the option’s exercise price to a low point in the stock’s value.
Piper Jaffray analyst Gene Munster said investors don’t care about the apology itself — but he and others are breathing a sigh of relief that Jobs kept his job throughout the scandal.
“The risk was that if something bizarre happened and Steve Jobs got fired over it,” Munster said from his office in Minneapolis. “That could have significantly impacted the company in a negative way. Steve Jobs is Apple. Ultimately, the scope of the backdating was bigger than we thought, but the impact turned out to be less severe.”