Apple's Options Scapegoat: Introducing Ms. Wendy Howell

Apple Computer (AAPL) continues to whistle through the options granting grave yard. An internal probe cleared Steve Jobs in the backdating of stock options. The mantra seems to be that he somehow knew about them but did not understand or benefit from them.

But they seem to have slaughtered a sacrificial lamb in the person of Wendy Howell, the former in-house Apple lawyer responsible for options paperwork. According to The Recorder, Ms. Howell was quietly let go late last year. Ms. Howell is reportedly the author of fabricated meeting minutes that were used to support the controversial options grant being investigated.

With ongoing federal regulatory and criminal investigations, Ms. Howell will probably have a great deal to say as either a defendant and or witness.

If Ms. Howell actually fabricated the meeting minutes and did all that bad stuff, the question becomes why. Why enrich your superiors and endanger yourself career wise and criminally? Corporate culture and internal pressure will surely be a factor. While arguably the top officers may not have financially benefited from the options, there is the possibility that senior level hubris, which is measured through wealth, played a directing role in managing circumstances. Executing a relatively minor player seems to be inadequate on a great many levels. It all depends on how you take bites out of the Apple because you want to avoid the worm.

AAPL 1-yr chart:

Comments

[Julian Ivan-Alexander]

TAKING OPTIONS OR NOT

Fred Anderson: $51 million
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How much Anderson made in his time at Apple Computer exercising options to buy company shares and then selling them.

Nancy Heinen: $48.9 million
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How much Heinen made at Apple Computer exercising options to buy company shares and then selling them.

Steve Jobs: $0
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Since returning as chief executive in 1997, Jobs has been granted options to buy 27.5 million split-adjusted Apple shares, but has never exercised any. In March 2003, he returned the options in return for 10 million split-adjusted shares of restricted stock. When they vested in March 2006, Jobs sold 4.57 million of them for $295.7 million to pay taxes, leaving him with 5.43 million shares currently worth $461.8 million.

Source: Securities and Exchanges Commission regulatory filings, Thomson Financial, Mercury News research

(thanks to IV AAPL Board)

2007 Jan 08 11:42 AM

[Mike Boyer]

The answer to your stupid question is Ms Howell, as a staff lawyer was very likely responsible for SEC compliance and also very likely responsible for getting the executive compensation issues onto the board meeting agenda and into the minutes. This was a problem that needed fixing and it seems very plausible to me that she took these steps on her own inititiative because it was her job to do it in the first place. Unfortunatley her attempt to "ammend" the minutes and fix her mistake didn't work but she should have lost her job anyway for the original oversight. Fortunately for Ms Howell she got paid very handsomely. I wouldn't feel too sorry for her.

2007 Jan 09 06:32 PM

[User 161721]

I worked with Wendy at Apple years ago. She was kind and intelligent and never would have done anything illegal without being directed to do so.

2008 Mar 08 12:54 AM