Federal Investigators Question Apple's Jobs on Options

Apple has repeatedly said that it is cooperating with investigators from the Securities and Exchange Commission (SEC) and the U.S. Department of Justice (DOJ), for instance, by providing them with regular updates on the company's internal investigations into how stock options grants were dated.

Reports in the San Francisco Chronicle and elsewhere on Tuesday said that Jobs had been interviewed directly and in person for the first time last week. The reports cited unnamed attorneys as their sources.

Apple Wants Resolution

The development could represent a milestone in the case, though how the Jobs questioning will affect the case remains to be seen.

It could move Apple closer to resolving the case, at least with federal authorities, or it could lead to new questions.

Neither Apple nor officials with the two federal agencies looking into the options case would comment on the matter.

Apple has tried to move beyond the options dating questions by stating it would take a US$84 million charge to repair the accounting surrounding dozens of grants to top executives. That came after an internal investigation led by former Vice President Al Gore, which found that although two grants to Jobs raised questions, there was no wrongdoing by the CEO.

Temporary Departure?

Even if Apple and the SEC and the DOJ agree that no current executives engaged in any wrongdoing or unduly benefited from the options dating practices, the matter may continue to dog the company.

A private lawsuit has been filed by shareholders, including the New York state pension system, and more are expected if backdating questions persist.

Apple has acknowledged that one options grant to Jobs included a claim that a board of directors meeting took place a month before it actually occurred.

Apple is one of more than 150 publicly traded companies with internal or external investigations under way regarding the handling of stock options grant timing.

The Stakes Are High

Several high profile CEOs have already resigned in the wake of questions about how the timing of options grants was decided. In some cases, options were backdated to coincide with a drop in a company's stock price, making the options more valuable to the recipient.

For Apple, the stakes are especially high when it comes to Jobs. In recent years, the charismatic CEO returned to the company he cofounded, helped rescue it from becoming a mere niche computer maker, and used the iPod device, online music sales and enhanced computer design to create an electronics powerhouse that was once again a Wall Street favorite.

If Jobs is implicated in wrongdoing with relation to options dating, it could be a significant blow to Apple. One analyst estimated that if Jobs were forced to resign as CEO, Apple stock could drop as much as 25 percent, a market capitalization loss of some $20 billion.

Indeed, Apple shares were hit hard when it was revealed that Jobs had hired a personal attorney to handle his involvement in the options case. More recently, a Wall Street rumor suggested that Jobs may take a leave of absence from his CEO role.

Nonetheless, investors don't appear too panicked. When Jobs debuted the iPhone and Apple TV devices earlier this month, buyers drove Apple stock to an all time high.

Apple understands the importance of keeping Jobs at the helm as well, Enderle Group Principal Analyst Rob Enderle told MacNewsWorld. "I expect they will do what they can to spare him if it turns out he was responsible for some of the decisions."

That's a calculated risk for Apple, but one it is likely willing to take, added Enderle.

Apple diverted attention from its options case by announcing the iPhone and Apple TV just after the new year, but Enderle claimed that continued questioning and additional revelations may add to the pressure now on Jobs.