They say that all good things must come to an end. Well, the bad things do, too. Apple Computer
Apple didn't go entirely unscathed from this episode, mind you. Former CFO Fred Anderson has resigned from the board, and the company is still under investigation by the Justice Department. But as long as CEO Steve Jobs, the company's unquestionable heart and soul, remains at the helm, Apple will be fine. And his hands look pretty clean when all is said and done, having rescinded most of his own backdated options long before this ruckus broke out.
As you probably know by now, Apple is far from alone in this predicament. New cases are still popping up, like the review just launched at medical device maker Biomet
And the fallout can be severe. Home Depot
Apple's special committee, headed by board member and former Vice President Al Gore, sloughed through 42,077 grant events on 259 dates, covering the period from October 1996 to January 2003. A few earlier dates were thrown in too, just to make sure that nothing untoward was going on in the distant past. This process took about six months, or 26,500 person hours, according to Apple's statement. That's a full-time job for a staff of about 26 people, by my reckoning.
All of that paperwork found faulty grants amounting to expense adjustments of $84 million over a seven-year period. The $4 million charge to 2006 earnings was taken in the fourth quarter, "due to its insignificance."
The arrogant tone of that statement aside, it's a relief to finally have this mess in Apple's rear view mirror. We'll get back to timely and complete earnings releases when the first quarterly report of fiscal 2007 comes due in a couple of weeks, and we can focus on cash flow and revenues rather than backdating and restatements.
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