• Los Angeles Times, Thursday, October 5, 2006 11:32 AM

Steve Jobs' job might be in danger, after the chief executive admitted to knowledge of backdated employee stock-option practices at Apple Computer. Options backdating has plagued Wall Street recently, and Jobs yesterday became the most high-profile Silicon Valley CEO to issue a public apology after admitting that he knew about the practice. A three-month internal inquiry had shown that Apple had backdated options on 15 occasions between 1997 and 2002. Back then, the practice wasn't necessarily illegal (it is now), although the failure to disclose it--or account for it properly--was.

"If this were to escalate to the point where Steve Jobs were forced to resign, it would be a disaster for Apple," noted Van Baker, an analyst at Gartner. However, he was quick to add that this appeared unlikely, since Jobs had not benefited personally from the practice. What are backdated stock options? It used to be that companies had to report the issuance of stock options to the SEC within two months of the grant date. Companies would simply wait and date the issuance of the stock at its lowest price, creating greater value for the holder. It's far harder for companies to do this nowadays, as Sarbanes-Oxley compliance requires that companies report the granting of options to the SEC within two business days. "I apologize to Apple's shareholders and employees for these problems, which happened on my watch," Jobs said yesterday.

He went on to promise "proper remedial measures... to ensure this never happens again." Fred Anderson, the company's former chief financial officer, had resigned from its board over the matter. Henry Hu, a corporate and securities law professor at the University of Texas law school, said many executives caught up in the backdating scandal weren't aware of the accounting requirements, and therefore had not acted with any intention of misleading shareholders.

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