Slashdot Mirror
Apple Investigated Over Stock Options
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."
Boring....
Religion for nerds. Stuff that really matters
So, Apple investigates itself over something that isn't exactly illegal?
Funnypics
Apple: officially "beleaguered" again.
And now, a PSA from David Lynch.
$1 salary ... plus tens of millions in backdated stock options. How altruistic.
Kind of like Buffett supporting a 50% inheritance tax and then leaving his children $Billions in tax sheltered trusts. Pathetic.
Slashdot headline creation in a nutshell...
MustardMan decides to take his dog to the vet to check for diseases.
Slashdot headline: MustardMan's dog being investigated for deadly pathogens!
This headline is complete BS. Apple's own internal auditors found something that might be an issue, and Apple reported it to the SEC themselves.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
I'm not quite sure how much these guys get paid, but I can see people saying that Apple employees are not losing much of their annual salary by mishandled stock options.
A big wake up call to those people: They are!
It is just too unrealistic to think that an Apple employee will not set massive amounts of money into the stocks of the company. Exponentially, the money will decrease as the position in the company gets less and less important.
So, before you hit that submit button to make a comment about how much money Apple employees already have, remember that Steve is doing the best by making sure that the money lost turns into money gained.
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.
Read the EFF's Fair Use FAQ
deserves to be on slashdot.
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..
The Kruger Dunning explains most post on
Apple's customers are like no others--a rich blend of the most sociologically elite with those seeking elegant, simple computing... Unlike users of Intel/Windows computers, a significant portion of Apple's users are active , exploratory , avant-garde and early adopters . The activities they enjoy are unique in the way that they more often incorporate rich media such as video and music as well as more active prosumer behavior than many more passive Windows [and Linux] users.
— MetaFacts, Inc.
With above-average household income and education levels, the Mac population [is] very attractive [ intellectually as well as physically
— Nielsen/NetRatings (as quoted by C|NET)
Reporting it to the SEC seems to be more of a CYA move than anything else.
The Christian Right is Neither (Christian nor right). See: Matthew 23, Matthew 25, Ezekiel 16:48-50
Man, I really need to start trusting myself.
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)
Wanna fight ? Bend over, stick your head up your ass, and fight for air.
Link
According to The San Francisco Chronicle:
"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".
But... they can't handle more than one mouse button!
The company that once refused to hire anyone who hadn't experimented with mind-altering chemicals. Trust me, at Apple, even the accountants think different.
you ignorant pigfuckers
In light of recent events, I think it's difficult to call Warren Buffet greedy or pathetic. As a self-made man, he lives remarkably frugally, and is exceptionally philanthropic. For more information, check the Wikipedia article on him.
http://www.TheGamerNation.com/Forums
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 that show up on the front page will get their attention.
mighty mouse is two buttons, duh..
And you know what they say about a cowboy with slight hands, don't you?
Sigh...a six-word subtitle, and it contains a typo. (It's sleight. sleight of hand, not slight of hand.)
Viper is the preferred editor of the Emacs operating system.
Since when are all Mac users half-Japanese?
who cares?
When Apple does something, it is A-OK! If this were IBM, Microsoft or even Red Hat, all the usual slashdot mac-zealots would be calling for their heads.
You know, I'd put my entire Karma on the line to say that if this was M$, instead of "Yawn, is this news?" posts, this entire story would be "M$ Anti-trust! Evil! Screwing their workers!" posts.
Your hair look like poop, Bob! - Wanker.
- can you interpret the subject line?
- it means, "up slashdot's large channel"
- this story is nonsense...
As something that is primarily a pointing device, mice should have six mouse buttons, not two. It only makes sense.
Anything metafacts says should be ignored. They use bmp images on their site.
tomorrow's slashdot headline:
Deadly pathogens being investigated in MustardMan's dog !
...and in other news, over fifty unnamed companies are being investigated in some manner for possibly doing something like what Apple might have done.
Back to you, Ted...
RTFM; please, I beg you.
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.
unfounded accusations should not be marked 'insightful'
Tax and accounting are two different things. (Maybe they shouldn't be, but that's a different story.) The tax issue you're discussing isn't fraud, it's the way the compensation taxes are supposed to work. There is a different tax issue related to backdating. I will discuss it below and I suppose it could be described as fradulent.
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 the employee is taxed on $80 of ordinary income. This is the standard treatment for compensation: a tax on one side is a deduction on the other. A payment of $80 cash to the employee yields the same treatment (tax deduction for the company, tax for the employee).
The *accounting* treatment under the old rules was definitely screwed up by failing to *ever* recognize expense. However the IRS didn't make the same mistake.
There is a different and more subtle tax issue that arises with backdating. Under the 1993 Clinton tax act, compensation in excess of $1 million is not deductible unless it is performance related. There is a possibility that backdating will lead to the option grant being deemed "not performance related" (since it has a baked-in gain due to backdating). In this case the company will lose the deduction when the option is exercised. The employee would still have to pay taxes. If an executive had exercised $100 million of backdated options, the company could lose the deduction on this amount. When news stories refer to tax issues related to backdating, I think this is mainly what they're talking about.
..because it's Apple doing it! Go Apple! Just to show they are pure in every way because they even investigate themselves when they aren't even in trouble.
Sig: I stole this sig.
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 always 'behind the curve' when it comes to rule changes. Why? Not because they are stupid, but because they are reacting to events, rather than being proactive.
For one thing, they aren't concerned with fully-detailed reporting of ALL of a company's employee remuneration, insurance, options, disclosure agreements, partial ownership of company IP, etc. They are concerned with... since 1934... the big guys. The insiders. So, they first wrote rules to prevent execs from trading in and out of a company's own shares in a 6-month timeframe. This was a popular activity at one time. The 1934 law was written to 'prevent' the recurrence of another 1929-1933 disaster.
They have been playing 'catch-up' ever since. In '87-88, they instituted rules to suspend program trading, in the event of a precipitous drop in the index, to 'prevent'another scenario such as October '87, when people couldn't get in and out of a trade, unless it was made 'at the market' (disastrous when prices are falling faster than one's broker can get a confirmed execution). It worked fine... as long as there was no precipitious drop. A 100 or 200 point drop would happen, the rule would 'kick in', and things settled down in the trading of affected stocks...
BUT, it didn't do any good when, in the late 90s, mutual fund guys just turned around and sold off huge blocks of 'healthy' stocks, in order to cash out all those clients who were riding the tech sector into the basement, and could simply call an 800-number and say, "Move me into Money Markets." The fund managers lookked at the Bloombergs, saw Yahoo, and all the tech things tanking, and sold GE, Banks, etc... At which point everyone headed for the exits. The 'rule', itself, contributed to the tech sector's woes spreading to all the other sectors. It was pretty ugly.
Meanwhile, back to execs... they had passed insider trading rules, and company's came back with a sort of 'programmed' trade setup for execs: A guy could say, in writing, that he was going to unload certain numbers, or percentages of holdings at a certain date in the future, and that absolved them of any hint of insider trading, BUT, after the SEC signed-on to the program, the guys in the companies decided they could set trades in advance that 'just happened' to coincide with earnings reports and whatnot, and then cancel their sales... result, the stocks themselves would get a double-boost from a good earnings report AND the news that x-number of guys at XYZ Corp decided to 'hold' their stock instead of taking profits on options. What really happened was the guys saw a huge increase in the paper value of their holdings, their equity was up, their lines of credit were better, with more collateralized equity behind them, etc.
So, the SEC is proposing to tighten up, again. It's a game. Apple, like the other 50 or 60 companies, probably got tipped by the SEC, themselves, that 'either you look at your pricing/dating, or we will.' Nobody, on either side of the game, wants to monkey with things, like, say, tightening up too much, negatively influencing the 'little guy' investors that really are the bread and butter of the whole Game, itself...
so you have this little drama, to avoid the uncertainty that immediately follows a close call or a minor disaster. If there was no human greed, no 'rocket scientists' coming out of the schools to show accounting and counsel, a 'new way' to do the 'old same thing', we wouldn't heed regulation, but, on the othe