Apple Investigated Over Stock Options 88
blamanj writes "Apple has joined the list of over fifty companies (most in Silicon Valley) that possibly mishandled stock options by backdating them. The technique is not illegal, but it can cause a company to improperly deduct employee compensation expenses and result in an underpayment of taxes. So far, Apple is conducting the investigation itself, but it has notified the SEC."
So (Score:5, Insightful)
Re:So (Score:1)
This isn't boring.. (Score:2)
I'm investigating myself. (Score:3, Insightful)
Re:I'm investigating myself. (Score:2)
Re:I'm investigating myself. (Score:5, Informative)
In any case, the self-investigation does seem strange -- how could the company not know if it had been done? If they really don't know, I'd say that's an issue in itself.
Re:I'm investigating myself. (Score:3, Informative)
Hardly the first company to do this. Probably not event the 10th company to do this this year.
Re:I'm investigating myself. (Score:2)
Re:I'm investigating myself. (Score:1)
Re:I'm investigating myself. (Score:2)
OTOH all this is just apple investigating their own books because they think they made a mistake.
if nobody made mistakes you wouldn't need audits in the first place, hell you wouldn't even need an accounting department
Re:I'm investigating myself. (Score:1)
Worst of all, backdating costs investors (Score:4, Informative)
When the employee exercises a stock option they are paying the company for the share. If the company back-dates an option to lower the strike price for an employee, the employee pays less for it.
Scenario:
The employee makes a bigger profit, the company loses. This is the worst
side-effect of back-dating stock options. You're cheating the other shareholders.
Re:I'm investigating myself. (Score:3, Interesting)
Backdating options is serious business, as it conflicts with a number of SEC regulations. Think about it - it's all the advantages of stock, without any of its drawbacks.
Apple might be starti
Re:I'm investigating myself. (Score:1)
Re:I'm investigating myself. (Score:3, Informative)
However, it has recently become illegal to offer stock options as compensation without expensing them (it used to not be - and a given company could reduce their taxes and inflate their bottom line by nonexpensing of stock options).
Because of this, if Apple's accounting was still backdating options after the new rules were passed, they would technically be exempt
Re:I'm investigating myself. (Score:2)
Re:I'm investigating myself. (Score:2)
According to more reliable sources, Apple's using an independent firm to investigate the issue. I'm not clear on this incident, it could be that Apple's total expenses were marked higher or lower, it all depends.
At any rate, if the expenses were higher, then profits were lower and therefore Apple probably owes less taxes (but stockholders were mislead--thinking Apple was more profitable than it really was).
If the expenses were lower, Ap
That's the last straw (Score:3, Funny)
Re:Sad (Score:1, Informative)
Re:Sad (Score:1, Informative)
He most certainly did.
http://www.chicagotribune.com/business/chi-0606260 177jun26,1,3667425.story?coll=chi-news-hed [chicagotribune.com]
"The investor also is setting aside stock valued at $3.2 billion to provide about $1 billion to organizations headed by his three children."
Obviously that inheritance tax is only for us peasants whose children do not have their own tax shelter organizations to funnel money to.
Re:Sad (Score:1)
Re:Sad (Score:2)
Pathetic? (Score:3, Informative)
Re:Sad (Score:2)
You forgot about the airplane.
Just sayin'.
Re:Sad (Score:2, Informative)
Options that went to the CEO were cancelled, never used.
Get your facts straight, dude.
Holy misleading headling, batman (Score:5, Funny)
MustardMan decides to take his dog to the vet to check for diseases.
Slashdot headline: MustardMan's dog being investigated for deadly pathogens!
Comment removed (Score:5, Informative)
Comment removed (Score:4, Insightful)
Re:Once again... (Score:4, Interesting)
Apple, Goole and others lobbied hard against the new FASB rules that makes this step necessary; without them, these companies could continue to artifically inflate their bottom lines.
How it works:
The old FASB rules didn't force a company to expense stock options. As such, they didn't come out of their bottom lines.
Meanwhile, whenever an option was exercised, the company would get a tax break for the 'expense'.
In other words, a company could spend money without noting it, and get a tax break if it was converted to cash. Nice little loophole there. It's essentially tax fraud without the illegalness. It was a great boon for the internet startups of the mid to late 90's, since they could have a very large pile of capital they could pay their emplyees with without it looking like they were diminishing their capital.
Under the new rules, stock options must be written down as an expense. The tax break still exists, but now it doesn't inflate the stock price, leaving it more balanced.
Option is expensed. Stock price goes down.
Option is exercised. The added demand and tax break brings the stock price back up.
You're confusing tax and accounting (Score:3, Informative)
Suppose an option gives an employee the right to buy $100 shares for $20. The right to do this is worth $80. When the employee exercises, the company gets a deduction for $80 and t
Re:CORRECTION. (Score:2)
1) Apple is not yet being investigated; they found and reported the problem themselves.
2) The problem has not been confirmed to be backdating.
3) Backdating is in fact illegal because it fraudulently mistates a company's earnings and evades taxes. The exception would be if the backdating is disclosed and appropriate taxes paid - but that isn't really backdating at all (just striking an option off-market.
Re:CORRECTION. (Score:1)
Bizarre article (Score:5, Insightful)
Apple is one of 57 companies being investigated. Who are the other 56 companies? No links, no nothing.
Stock options in the Valley are definitely a problem, and if Apple screwed up, they deserve whatever they get. However, they did inform the SEC, so it seems a bit early to get out the stakes and holy water.
Re:Bizarre article (Score:1, Insightful)
More and more, Slashdot is sucking every day. Compared to other sites, its news is late, it has misleading titles and reports things that are really uninteresting.
Was it always this way, or have I just moved on. Dunno.
Re:Bizarre article (Score:3, Funny)
Re:Bizarre article (Score:3, Funny)
Perhaps, but it will take a long time for the ineformation to come out.
Re:Bizarre article (Score:2)
And more importantly Is one of the 57 verieties Apple now?
Heinz Self investigatin' Self SEC reportin' Wholesome Apple Soup!
Re:Bizarre article (Score:2)
And I hope they rot in hell.
Re:Bizarre article (Score:2, Informative)
Re:Bizarre article (Score:1)
It's never too early for stakes and holy water. Usually, you're in trouble when it's too late .
Re:Fuck you and yr boring, whitebread, missionary (Score:2)
I am sorry, but this article in no way (Score:5, Insightful)
what next, a deep look inside Apples accounting practices? Followed by an investigative report on which urinal cakes Apple uses?
None of that is News for Nerds, or stuff that matter..
Re:I am sorry, but this article in no way (Score:2, Insightful)
Re:I am sorry, but this article in no way (Score:2)
And no matter what company it was, it shouldn't be here becasue it is not about tech, or typical common geek fare. It is about finance.
Re:I am sorry, but this article in no way (Score:2)
Do me a favor. Look over to the left of your screen and click on the "Politics" link.
-Eric
Re:I am sorry, but this article in no way (Score:2, Insightful)
So what, you don't think there are nerds in accounting? You might want to swing by there one day during lunch, you'd be amazed.
Re:I am sorry, but this article in no way (Score:2)
Lets not kid outrselve, slashdot was designed for a specific type of nerds and geeks. Even the Urinal cake industry has nerds.
Even if this was a Finance nerds site, this story would still be a none story.
Sheesh.
Re:I am sorry, but this article in no way (Score:2)
I hired Solid Snake to take a look. They're pink, cylindrical, with an apple logo on them...Manufactured by KRYSTAL.
Re:I am sorry, but this article in no way (Score:3, Funny)
Re:I am sorry, but this article in no way (Score:1)
Nothing to get worked up over (Score:2)
Confidence (Score:1)
But if I did, wouldn't I'd prove myself wrong, this making myself untrustworthy ? (it aint easy being insane, but sombody's gotta do it)
The real Apple news... (Score:3, Interesting)
Link [appleinsider.com]
Re:The real Apple news... (Score:3, Interesting)
This, on the other hand, is actually happening.
Not Illegal?? (Score:2)
"Regulators are investigating whether companies broke securities and tax laws by backdating stock-option grants to coincide with the lowest possible price. The practice of backdating is drawing scrutiny because it maximizes the amount of money executives can make in exercising options."
It seems like plenty of As need Cing, but I think it's way to early to say "the technique is not illegal".
Please, Can We Have Real Editing? (Score:1)
Yes, off-topic, etc., but there's really no other place to say this: We need better editing of story submissions. Apple is not being investigated, Apple is reviewing its own practices, and it's not even clear that what they're looking for is actually illegal. The summary even goes on to say that Apple notified the SEC of its investigation itself. So why the sensationalist headline?
My proposal: let's tag this story as pleasefixthisheadline. The editors rarely respond to comments, so maybe having tags
from the slight-of-hands dept. (Score:3, Insightful)
Sigh...a six-word subtitle, and it contains a typo. (It's sleight. sleight of hand, not slight of hand.)
Re: from the slight-of-hands dept. (Score:2)
Apple == Boring (Score:3, Insightful)
Re:Apple == Boring (Score:3, Funny)
No, it would be 'Holy shit! Microsoft is taking responsibility for something!"
Apple controversy! (Score:2)
Back to you, Ted...
Just a Game (Score:1)
No they probably aren't, if you think of millions of 'facts' and Excel 'cells.' But the SEC has only recently decided to maybe change the rules of compensation disclosure (which includes the valuation of stock options, the 'window' in which a grant can be dated, etc). And they're only looking at the top 5 execs in a company, so, the million Excel cells aren't exactly on the table.
The SEC is