Apple backdating stock options

15-Jul-2016 05:46 by 2 Comments

Apple backdating stock options

The odds of this happening are about one in 300 billion.

Some observers have said this is just the tip of the iceberg.

Former vice president Al Gore, who sits on Apple’s compensation committee and supervised the company’s internal investigation of its option backdating case, has been granted options to buy 10,000 shares of Apple (AAPL) at the strike price of 9.67, according to Jonny Evans at Macworld UK.

With Apple shares closing at 0.98 Tuesday night, the options would be worth 3,100 if exercised today.

The question: did these companies backdate options grants – and falsify records – to make them more lucrative for their top employees?

Or did a lot of CEOs just have amazingly good luck?

By failing to include these options in their books, companies may be overstating their profits – and may, ultimately, have to restate their financials.

Plaintiffs' law firms have already filed a number of securities class actions and derivative lawsuits on the backdating issue."It’s pretty sad to see that so many executives, after convincing their shareholders to approve stock incentive plans, thought they could get away with rewriting the terms," said Peter Pease, a partner at Berman De Valerio.Still, given that (a) backdating helps make earnings look better than they are; and (b) Jobs is a huge shareholder of Apple (10.12 million shares, as of last April), how could he not benefit from this behavior?Jobs recommended some backdating dates for other employees.But it could lead to a false disclosure, which may, in turn, violate federal securities laws.Company stock option plans are on file with the SEC, with a description of how the strike prices are calculated.The lower the strike price, the greater the potential for making money when exercising the options.