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Apple board defends Jobs over options grants
2007-04-25
Apple Inc. (Nasdaq:AAPL) board of directors defended Chief Executive Steve Jobs on Wednesday after the company's former finance chief linked him to the handling of backdated stock options grants. The remarks by former Chief Financial Officer Fred Anderson renewed a focus on any role Jobs may have played in the options grants after the company had said its CEO knew about certain inaccurate options dates but did not benefit from them. "Steve Jobs cooperated fully with Apple's independent investigation and with the government's investigation of stock option grants at Apple," said a statement by all of Apple's directors except Jobs. "We have complete confidence in the conclusions of Apple's independent investigation, and in Steve's integrity and his ability to lead Apple," they said. Directors signing the statement included former U.S. Vice President Al Gore, Google Inc. (Nasdaq:GOOG) CEO Eric Schmidt, Bill Campbell, Millard Drexler, Arthur Levinson and Jerry York. The iPod maker has taken pains to distance Jobs -- the man widely credited as the driving force behind Apple's success -- from the SEC investigation. On Wednesday, Apple's share price topped $100 for the first time, hitting $102.80 in after-hours trading, after the company reported better-than-expected quarterly results. Jobs, who co-founded the computer maker that is known as one of the most innovative Silicon Valley technology companies for its breakthrough computer, music and soon-to-be-released phone products, declined to comment on the issue. "You know, I'm just going to let the board's comments stand, " Jobs told Reuters following the release of the company's quarterly results. The U.S. Securities and Exchange Commission reached a settlement on Tuesday with Anderson, who said he had relied on Jobs in handling 2001 stock option grants that later became the subject of investigation and a civil lawsuit. Anderson's lawyer said Tuesday that his client had warned Jobs to price a January 2001 grant on the date the Apple board had agreed to it, but was told by Jobs that the board had given prior approval and would verify it. SEC lawyers accused Anderson and Nancy Heinen, Apple's former general counsel, of backdating more than $20 million in stock options in 2001 for themselves and other executives, including Jobs. Heinen's lawyer said on Tuesday that every action she took with respect to the options grants "was fully understood and authorized by Apple's board of directors," and that she "did not backdate stock options." The agency said it would not pursue enforcement action against Apple, but said that decision does not bar further civil claims against other Apple executives. This could include the chief executive if regulators are looking to work their way up the ladder by charging lower-level executives to gain their cooperation, defense lawyers said. But if the SEC declines to pursue Jobs, he would probably also avoid criminal prosecution, according to defense attorney and former federal prosecutor Scott Christie. "It would be odd for the SEC to decline an investigation for lack of evidence and the U.S. Attorney to then pursue a case criminally ... they would feed each other," Christie, a lawyer at McCarter & English, said in an interview. Christie said that prosecutors generally start low in the corporate hierarchy and work up to the ultimate target of the investigation by obtaining cooperation through plea deals. "It remains to be seen whether that is the strategy and how effective it will be," he added. Prosecutors will have to move quickly if they want to pursue fraud charges related to the 2001 options grants because a five-year statute of limitations on such cases could expire soon, said Jeffrey Rosen, a former SEC attorney and now a defense lawyer with Cozen O'Connor in Washington, D.C. "If anything is going to happen criminally it should happen pretty soon," Rosen said. (Additional reporting by Michele Gershberg in New York and Duncan Martell in San Francisco)
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