What Didn't Apple CEO Steve Jobs Know, And When Did He Not Know It?

I have largely ignored Apple's (AAPL) current stock option imbroglio -- the market seems intent on getting past it, so far be it from me to get in the way -- but am I the only one not entirely buying the select board committee's report? They have changed their description without much explanation: Originally CEO Steve Jobs supposedly knew about the backdated options, but he didn't influence or benefit; now he knew and influenced it, but still didn't benefit.

Hmmm.

More broadly, much of the stock option witchhunt is just that, a witchhunt: A hunt for the superficially guilty without any intruding thought about motives or consequences. That said, I'm still amazed that there are people out there who apparently believe that the micromanaging Mr Jobs didn't know more than it currently seems about his own compensation at Apple. It all comes to that old phrase, What didn't Jobs know, and when did he (allegedly) not know it?

Comments

[Julian Ivan...:]

1) So what if the options were cancelled and he was issued with stock? The guy gets paid $1, and received compensation in the for of stock and/or options. Irrespective of whether the original granting of the options was fully approved by the Board and/or backdated, the guy can't be expected to work for nothing. With the options cancelled, the Board granted Jobs a different form of compensation - restricted stock. While one may have followed on from the other, that does not necessarily mean that LEGALLY one is derivative of the other in the sense that the tainted nature of the first has any bearing on the second.
2) It has already been stated that Jobs approved the backdating of others' options in some cases. This was not necessarily in itself either wrong or criminal in itself. At stake is not the question of whether he approved of the backdating, but whether Jobs personally acted illegally rather than someone else, in the execution and recording of any backdating. Amidst the hysteria, it is usually forgotten that backdating was not in itself illegal, and was common place. It is the manner of the recording of any backdating in company documents, and whether shareholders were thus privy to such actions, that either makes such practice illegal or not.
Jobs' approval of stock options grants, or the backdating of them, does not in any way criminalise him if others were responsible for the lack of legal accounting of those grants in SEC and shareholders' documents.

The only spin I keep seeing is not from Apple, but all the media whores and legal pundits surrounding it vying for attention and squaking complete FUD.

Jobs may have gotten up to something naughty, or he may not, but at this point, there seems to be absolutely no evidence that he did and anything else is sheer, utter, speculation. So far, the evidence suggests he is NOT guilty of anything illegal, even if the whole concept of backdating may seem unethical in itself.

2007 Jan 02 12:34 PM

[dana maryla:]

This posting is a pathetic, apathetic acquiescence to all the worst in media and government enforcement today.
SHAME
But, folks, all of you reading the blogs and especially the bloggers, why don't you help "US", not just the Mac users but all of us, and shift the issue to where it rightly belongs.

Yes, the press is corrupt, lazy, and lower than even pimps and dope dealers on my list of lowlifes, but that is not why I am writing.

It is the POLITICAL CORRECTNESS and DISTRACTION on the part of our government agencies which fits right into the corrupt and mangy press.

At a time when CEOs of companies like ENRON, WORLDCOM, DELPHIA and dozens of others have taken hundreds of millions in salaries and bonuses----At a time when those CEOs have betrayed their shareholders trusts by completely falsifying data and running their companies into the ground and making their stock worthless-- At a time when CEO's have cheated consumers with inferior, damaging, even toxic products....and lied and distributed completely false financial information that led to the ruination of countless other investors----It is at this time when our government agencies, [who can't seem to do anything right to rectify those situations until way after the fact] make a point of going after APPLE and Steve Jobs, for doing what apparently many hundreds of corporations did [ some more innocently than others] in the face of ambiguously and improperly written rules for issuance of options. Their target, easy to find and self-aggrandizing in the publicity the Feds get, is, of all people, Steve Jobs, who has probably increased shareholder value more than any other CEO in the nation, who has contributed mightily to changing the entire economy and way of life of our citizens, and who has taken a meager salary of $1 per year, and who has not profited himself from any of these transaction. In a world where the equivalent of corporate rape and assault are commonplace and the Feds are helpless to do anything, they do the equivalent of sending a swat team to handle jaywalking. Perhaps it makes them look like they're doing something.

IN fact, it is time for you Bloggers, who are in touch with each other and a vast public to be proactive instead of constantly reactive to the stupidity of the media and, in this case, the Fed agencies. Why not shift the issue to where it belongs, the bad judgment in first drawing up poor guidelines, and then attacking a CEO and company, where shareholders have prospered, consumers have been delighted and not cheated, and where the economy and lifestyle of our nation has been enhanced. Goddamnit, folk,s write something about that. Shift the focus of all this press nonsense. Don't be satisfied with another nearly insane instance of 'much ado about nothing".

It is up to you to shift the debate to where it belongs. That is what Blogs should be able to do, and not just passively be puzzled by the world run amuck around them. Why this kind of nonsensical prosecution at all? Why should be part of the pathetic whores in the media who need a new John every newscycle.

Let's go and DO SOMETHING.

2007 Jan 03 02:06 AM

[Terrin:]

Apple's position has not changed. On October 2, 2006, Apple released a press release that an independent investigation by a special committee of its board of directors into stock option irregularities was concluded. At that date, the press release informed us that the independent investigations findings was given to independent auditors (non-Apple affiliated forensic accountants) who were in the process of further reviewing the findings.

In the October press release, Apple stated the independent investigation found that, "In a few instances, Apple CEO Steve Jobs was aware that favorable grant dates had been selected, but he did not receive or otherwise benefit from these grants and was unaware of the accounting implications."

On December 26, 2006, Apple released a new press release entitled, "Apple Files 10-Q and 10-K." This press release contained no new information, but confirmed the results of the initial investigation.

During that time, unsubstantiated rumors have been circulated by so called news sources. These cite unidentified sources. The rumors claim Jobs participated in selecting the option dates, and has hired a lawyer. I say unsubstantiated because Apple, the SEC, and the independent investigators have not commented on these rumors.

I will point out that even if Jobs did in fact directly participate in selecting the option dates, this is not inconsistent with Apple's press release which states that he was aware that favorable grant dates were selected. Being involved certainly involves being aware.

People should move on here. Jobs is not an accountant. Moreover, many SEC rules are very complicated. Apple has a CFO and an in house legal team that are supposed to understand these rules, and then advice Jobs. That is their job. You will notice Jobs never gives the financial details during Apple's quarterly meetings. The CFO, who is a certified public accountant, does. There is a reason for that: namely that is not Jobs area of expertise.

Provided Jobs reasonably believed the advice he was given was legal by professionals, he was justified in authorizing the favorable grant dates, if he in fact did.

See,

www.apple.com/pr/libra...
www.apple.com/pr/libra...

2007 Jan 04 10:04 PM