WSJ: Steve Jobs May Have Helped Pixar Director With Suspect Options Grant 7 comments
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The Wall Street Journal reports that in 2001, Apple CEO Steve Jobs helped Pixar Inc. negotiate film director John Lasseter's contract, which included a large and exceptionally well-timed stock-options grant. Dated three months before the contract was signed, the grant carries the lowest share price of the previous year, and was signed by Jobs who was then Pixar CEO and Chairman. The contract was an early renewal of a 1997 contract, 
sweetening the pot to keep competitors from snatching up the world's #1 animation director. It included a $5 million signing bonus, $2.5m per year, and one million stock options that were not priced on the date of the contract. The options were dated Dec. 6, 2000 -- the bottom of an extended slide. The Journal reports that by March 20, the day before the contract was signed, Pixar shares were up 24%, giving Lasseter an unrealized profit of $6.4m. On March 12, nine days before signing the new contract, Lasseter filed a SEC Form 4 reporting the sale of previously-owned Pixar shares, but made no disclosure of the December grant. Edwin Catmull, then Pixar president and currently president of Disney and Pixar, also received 500,000 options dated Dec. 6, 2000 which he didn't disclose until Feb. 13, 2001, despite having made other Form 4 filings in the interim. Walt Disney Co., Pixar's current owner, is conducting an internal probe into its options dating practices, and "people familiar with the matter" say federal prosecutors are awaiting its conclusion. Jobs sits on Disney's board and is its biggest shareholder. The SEC is already investigating Jobs's role in options backdating at Apple; an internal probe recently cleared him of wrongdoing, but said he "was aware or recommended the selection of some favorable grant dates."
Sources: Wall Street Journal
Commentary: Polishing The Apple: Steve Jobs and The Options Affair • Apple's Corporate Miscues May Tarnish Its Image • Apple Computer: Should CEO Steve Jobs Resign?
Stocks/ETFs to watch: Apple Computer Inc. (AAPL), Walt Disney Company (DIS)
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This article has 7 comments:
briefing.com
AAPL Apple Computer: Valid concern with Pixar's options granting activities, continue to see this as potential overhang on AAPL shares - AmTech (66.98 ) -Update-
AmTech says they believe there is valid concern with Pixar's options granting activities, their analysis of SEC filings dating back to 1996 indicates that the co's compensation committee is run by an independent board who are not current or former employees of Pixar.
**********More importantly, contrary to recent speculation, they do not see any indication that Steve Jobs was ever a member of the compensation committee at Pixar, nor has he been a recipient of options********.
They do not view Pixar's options activities lightly and continue to see this as a potential overhang on AAPL shares. They recommend buying on weakness as they believe AAPL's competitive advantages and growth prospects remain among the strongest in large-cap tech.
WSJ: "Steve Jobs helped negotiate an employment contract with a top film director that included a large stock-options grant with an especially well-timed date, according to a person familiar with the matter."
*** Who is this person that is familiar with the matter ? Why did this person disclose the information to the author ? What did the reporter do, go out and find an ex employee who worked with Pixar at the time and probe them ? Was this person, possibly a clerk in the legal department. ?
WSJ: "It remains unclear what role, if any, Mr. Jobs played in selecting the prior grant date of the agreement's stock options. "
*** Then why drag Mr. Jobs into it? The author, without question, is blaming Mr. Jobs.
WSJ: "In November, Disney Chief Executive Bob Iger said that "we aren't aware of any basis under which stock options that were issued by Pixar would have a material impact on our financial statements." Prosecutors are awaiting the conclusion of the Disney probe.
*** If they are awaiting Disney's probe, then why is the "person familiar with the matter" and the writer not doing the same ?
WSJ: On March 21, 2001 SJ signed an employment agreement with Lasseter, essentially extending his existing employment agreement due to expire in 2004. The new agreement will not expire until 2011. He received a 5 million signing bonus and a 2.5 million salary.
*** The following is very unclear. "In connection with the Employment Agreement, Mr. Lasseter was previously granted an option to purchase 1,000,000 shares of our common stock at the fair market value on the date of such grant," according to Pixar documents filed with the SEC. This implies Mr. Lasseter already had the options from the previous employment contract. Those options which he already had under the previous employment agreement, were dated Dec. 6, 2000, carrying a strike price of the stock's close the day before.
Now the question becomes, did Mr. Lasseter actually receive them on Dec. 6, 2000 or did he receive them on the signing of the new contract ?
*** The questions as to when he actually received them are what is being investigated. According to Mr. Lasseter's filings with the SEC he received them on Dec. 6, 2000 as that is the way they were dated to be vested.
However, according to Pixars filings, the options vested as though they were issued in the March extension of his employment agreement.
My guess, the options were granted in Dec. 2000, then those options were renewed as part of the new employment agreement in March of 2001. In other words he already had those options and they were included in the new agreement.
Since Pixar was responsible for reporting to the SEC they showed the options vesting in April as they became renewed in march as part of the new employment agreement. According to Lasseter they began vesting in January 2001 as, in his mind, he already had them. My take is this is a technicality they are exploiting.
Talk about picking the bones clean, these reporters and the SEC have outdone themselves on this one. Now they are going to turn this back on Job's. Somebody has to stop this type of stuff.
PS: the above is my opinion I am not a lawyer.
That is the problem with the whole train of thought here. Either the people who did this knew it was wrong and did it anyway, or they were incapable of performing their corporate governance duties. Someone (note I do not specify who) screwed up, big.
The WSJ reporters apparently find a story hook in that someone famous appear close to more than one crime scene. That is something reporters get paid to do. On the other hand, corporate executives and directors get paid to make money and and safeguard the interests of the shareholders, abiding by laws and regulations. Apparently the reporters are better at their Job(s) (sorry, couldn't resist the pun) than some executives and directors are at theirs.
yawn.. the WSJ haven't done anything. All they've done is run an old story from last August as if it was news, without adding anything new to the mix. Its the media whoring for hits, as usual.
Repeat after me: backdating was not illegal, backdating was not illegal, backdating was not illegal