Valleywag
Amid the mess of Apple Computer's executive options scandal, there's one consolation for Steve Jobs, the computer company's brilliantly insane CEO. Investors would really, really miss him. About 30 companies have lost top execs after the discovery that they deviously fed extra profits to chosen executives by adjusting the dates of options grants. Most of them aren't missed. But Apple's Jobs, the driving force behind its iPod music player and corporate recovery, may be the Valley's one truly indispensible CEO. Which makes Apple vulnerable, as illustrated by the excerpt below, but flatters Jobs. As if the Apple founder needed further inflation of his overblown ego.
Patrick McGurn, executive vice president of Institutional Shareholder Services, says: "Apple is in a much more difficult position than other companies in the backdating morass, because a significant portion of its market valuation is based on Steve Jobs staying at his job," he said. [New York Times]
Comments
That quote set me back too. How old is Steve Jobs? How many more years can he stay at Apple? How much higher can the Apple stock go before Steve Job retires?
It's fairly amusing that Apple's line in this matter is that Jobs never "benefited from" the backdated options because he hasn't yet exercised them. That's like saying that someone didn't steal a diamond because he hadn't yet taken it to a pawn shop!
Options backdating was encouraged by Silicon Valley law firms for a long time because a few million dollars of restated earnings was pretty much off everyone's radar, including the SEC. The bonus for execs was some fairly mega tax nicely evaded at seemingly no consequence. It would seem certain that an insider like Jobs would be well aware of this practice, both its risks and its benefits.
But recently the SEC has started to care.
This SEC investigation is the 1% probability downside that was part of the calculus of this common tax evasion scheme all along. Apple's board (shareholder representatives) were completely OK with everything, and documents (forged or not!) prove that.
The .001% risk is that the SEC will want to turn Jobs into a Ken Lay and will actively seek to destroy him personally in spite of contrary shareholder wishes. This is why he's retained an attorney.
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