Apollo Group Documentation and Treatment of Stock Options will Result in “Material Adverse Impact” on Financials

Last December, Apollo Group announced that a special committee of outside directors had completed a seven-month investigation and found that certain former officers masked failures in the stock-option grant approval process. The apparent cover-up affected Apollo’s financial reporting and tax payments, and today Apollo disclosed that these adjustments would result in a “material, adverse impact” on past-reported financial results. Apollo Group announced last November the resignation of its chief financial officer and treasurer for “personal reasons,” and that its chief accounting officer was on administrative leave.

Today’s announcement corroborates the extent of governance deficiencies in the executive compensation area. Institutional investors and the regulatory community should begin to develop better standards and guidance for what minimal steps are necessary to protect against abuses, and strike the right balance between executive retention through incentives that are aligned with shareholder interests and the long-term value of companies.

For more on this latest story from Apollo, see CFO.com.

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