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Apple offers to pay employee taxes on misdated stock options
2007-03-17
Apple Inc. continued its effort to get out of a stock option backdating quagmire on Friday, offering to pay any extra taxes incurred by employees and let them correct option "strike" dates. Apple outlined the offer in a US Securities and Exchange Commission filing that estimated the cost of the plan would be 67,000 dollars. Fewer than 100 employees could be subject to additional income taxes due to exercising misdated stock options since 2005, according to Apple spokesman Steve Dowling. Apple will also let employees with unsold options correct strike dates, days used to determine the price at which they can buy stock, and pay the workers for any loss of value, according to the filing. "If they still hold the option, we will adjust the stock price and make up the difference in cash," Dowling told AFP. "If they have already exercised, we are paying the extra taxes on their behalf." Because of Internal Revenue Service rules, the offer does not apply to Apple officers such as chief executive Steve Jobs. Jobs voluntarily cancelled his outstanding stock options, according to Apple. Jobs has been questioned by US federal investigators as part of a probe into the granting of stock option awards at the Cupertino, California-company which makes Macintosh computers and the best-selling iPod digital music players. Apple has said that Jobs was aware of irregular backdating of stock options for some executives, but that he did not personally benefit from the awards. Other technology firms, including McAfee and CNET, have also been roiled by the wide-ranging federal probe into the granting of stock options at over 100 companies. The backdating of stock options is not illegal itself. But it is improper to manipulate the date on which stock options are awarded, or to grant such rewards without disclosing them to shareholders in security filings. Executives could reap bigger rewards cashing in stock options if the date on which they were granted is manipulated to when a company's share price was at its lowest. Following an internal review overseen by former US vice president Al Gore, Apple said that it would account for extra non-cash stock-based compensation expenses of 84 million dollars, dating to 2004.
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