Apple backdating stock options
The backdating problem was first highlighted by Professor Erik Lie of the University of Iowa, who published his initial study in 2004.
Professor Lie concluded that the robust profitability of so many options was statistically impossible absent some artificial influence such as backdating.
Over the summer, we learned that Apple had engaged in backdating and springloading stock options in an attempt to increase the value of stock option grants.
Fifty-two companies currently under criminal investigation. Moreover, the company avoids having to expense the options as current compensation, thus increasing earnings in the near term.
As a consequence, the option is immediately profitable, or “in the money,” to the option holder.
"Shortly after the Board approved the 7.5 million option grant, Jobs expressed dissatisfaction with its vesting schedule," the complaint said of the period after August 2001.
After a series of discussions between compensation committee members and Jobs, the filing alleges, the options price was set in December 2001 at .30 -- although the stock at the time was trading at .01.