Jobs Apologizes for Accounting Issues

In a report to the US Securities and Exchange Commission regarding allegations that the company may have failed to report certain backdated options granted to its senior executives as expenses over the last several years, Apple today said its CEO, Steve Jobs, knew something about his company's options backdating practices, but never benefited from backdating personally.

"Stock option grants made on 15 dates between 1997 and 2002 appear to have grant dates that precede the approval of those grants," Apple acknowledged in a statement. Jobs was re-appointed "interim CEO" of Apple in September 1997.

Backdating options is the practice of granting options whose exercise dates are set to sometime in the past, in order that they may immediately be of some value on paper - assuming the company's stock value has risen since that date.

Though not an illegal practice, the failure of a public company to report the value of those option grants as expenses is considered illegal. If Apple finds itself (along with several other companies that are the topic of SEC investigations, including nVidia and Juniper Networks) having to restate its earnings for up to nine years, it could dramatically change the financial landscape of the company, negatively impacting investor confidence for some time to come.

That loss in confidence could conceivably outweigh any financial penalty Apple may incur on the part of the SEC.

Apple says the actions of two of its former officers are now being heavily scrutinized; and one of its former executives and recent board members, Fred Anderson, has resigned from the company's board of directors. Anderson was Apple's CFO from 1996 until 2004.

"I apologize to Apple's shareholders and employees for these problems, which happened on my watch," Jobs stated this afternoon. "They are completely out of character for Apple." The complete details of Apple's SEC report have yet to be revealed, and may remain private pending a decision by that body.