Options scandal sees Jobs hiring his own lawyers

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The Independent Online

Steve Jobs, the visionary founder and chief executive of Apple, is facing new questions over his future following additional allegations in the company's share options scandal.

Federal prosecutors are examining whether to bring criminal charges over the iPod manufacturer's admission that options granted to its executives were secretly backdated - a practice often used to inflate executive pay artificially.

Apple has already said that an internal investigation "raised serious concerns regarding the actions of two former officers" - believed to be its former general counsel and former finance director - and yesterday San Francisco-based daily The Recorder reported that the Justice Department is examining allegations that executives faked documents to cover up the backdating.

The paper also reported that Mr Jobs has hired a separate lawyer to represent him, prompting shareholders to fear that he could be dragged personally into the scandal. Mr Jobs decided in recent weeks that he needs legal representation separate from Apple's lawyers at O'Melveny & Myers, it was reported.

His own attorney is now dealing with the Securities and Exchange Commission, the Wall Street regulator, and the federal Justice Department.

Apple made no additional comment yesterday, but in previous statements it said it had found backdating of options grants on 15 occasions between 1997 and 2002 and that Mr Jobs was aware that some "favourable grant dates had been selected". Although the board committee found no misconduct on his part, Mr Jobs said at the time: "I apologise to Apple's shareholders and employees for these problems, which happened on my watch. They are completely out of character for Apple."

The shares tumbled more than 5 per cent in frenetic trading as the US stock markets opened yesterday, although they then recovered to end at 81.52. The turmoil came as Apple finalised its twice-delayed annual results, which it has promised to file before the end of this week. It is having to correct at least four years of figures distorted because of the fake options grant dates.

Investors are fearful that the scale of the restatement could give ammunition to the prosecutors and shareholders' lawyers circling the company. In what has become the biggest scandal facing corporate America since the collapses of WorldCom and Enron, more than 100 companies are under investigation for backdating options grants.

By pretending the grants were made on days when the share price was low, executives maximise the profit they bank when the option is exercised years later.

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