“Apple Computer Inc.’s Steve Jobs should give it up,” Graef Crystal writes for Bloomberg. “What am I talking about?”
Crystal writes, “Some $85 million or so that the chief executive officer collected because of a sleight-of-hand the maker of the iPod music player and Macintosh computers engaged in when it awarded Jobs some mammoth stock option grants. That’s money that should go back to the shareholders.”
“Apple’s well-oiled public relations machine has said that because of ‘irregularities’ in the grants, the options were canceled ‘and resulted in no financial gain to the CEO,” Crystal writes.
Crystal writes, “Nothing could be further from the truth.”
Full article here.
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He’s worth a billion to apple
id say he more than earnt it
Jobs should be compensated for what he has done for Apple. The options were not used. He was paid with shares. If the share holders do not like that, they can fire the board. I am a very happy shareholder. I feel Jobs has brought a lot of weath to many shareholders and he deserves some of the wealth.
That should get the sharks circling.
Lawyers, start your lawsuits.
And Crystal knows this because…?
Microsoft should put Steve Jobs on it’s payroll. Given all that Microsoft has stolen from Apple and all the various Mac OSes, he’s worth a few billion at least.
Seriously, where would Windows be without the Macintosh?
DOS prompts, command line bullshit and all!
The BSOD is the ONLY Microsoft innovation!
uh oh, be careful, last time someone said Jobs should give money back to the shareholder his company started going downhill. I don’t want to mention any names but it rhymes with HELL
Apple does not pay dividends. So the money should go to whom? Lawyers, financia analysts, Crystal, Bloomberg; just who? Perhaps it’s better left where it is.
Put that one to the shareholders and I think I hear a roar of “thank you” and certainly no cries of “you robbed us”.
He saved the company and turned it into the most formidable force in computers and consumer electronics at the same time as producing returns for shareholders they could not have dreamed about – even in 2003…
Silly notion in my opinion. Disregarded.
Is it “Graef Crystal” or “Grief” Crystal?
Graef Crystal is a well regarded compensation specialist, and one of those gadflies who has, quite rightly, blasted the obscene financial packages often granted to America’s CEOs, even for mediocre performance. If any of today’s CEOs deserves to be thanked for what he has accomplished through genuine vision and leadership, it’s Steve Jobs. That said, back-dating options is undeserved, free money from a rigged game. I would hope Steve would do the right thing. Apple can use that money to develop even more “insanely great” products.
Shareholders: “Thanks for raising AAPL by ONE THOUSAND PERCENT” over the last few years. Now give us back the money you made. We know we only pay you $1 salary, and you’ve taken your pay in the form of stock, options, and use of a company jet, but how dare you actually make money from that!.
Yeah, right.
==
I would hope Steve would do the right thing. Apple can use that money to develop even more “insanely great” products.
==
. <- $85,000,000
………. ………. ………. ………. ………. ………. ………. ………. ………. …. <- $8,000,000,000 (Cash Apple has, approx.)
Jobs is worth far more than a paltry 85 million to Apple.
It probably costs Apple $85,000,000 per quarter for rent/electricity for its retail operations alone. (guessing)
The options have nothing to do with Steve. Leave it to him to decide whether or not he wants to give them back. 85m means nothing to him. Passion for making great stuff is what drives him. This stinks of backoffice admin trying to pick on the pencils the rainmakers are entitled each month. I see that everyday at work.
This has nothing to do with what Jobs is worth and everything to do with abiding by the law and Apple’s image as a company. Likewise, he doesn’t get to evade his taxes just because he is worth a lot to the US economy.
OK Graef, so Steve Jobs deserves only his $1 per year salary for being CEO while the stock performed better than any other stock in its sector. I’m glad your not on my compensation committee
realist, you obviously have no clue, and your analogy is inapposite. There is no proof of any wrongdoing; in fact, there is proof of the opposite, i.e., that there was in fact no wrongdoing on his part. Crystal’s elaborate timeline, written to sound suspicious, actually shows that. Cancellation of options, timing of options, re-issuance of options, etc., are all perfectly legal things to do. They have accounting impacts, though of what significance here is unclear [where there is no showing of dilution to other shareholders, and where it appears that Apple’s compliance with SFAS 123 is already demonstrated]. He got old options cancelled [something my company did too for ALL its stockholders, not merely execs], and new ones issued at a better strike price. In the quantities he receive, they are almost all non-qualified, and so no favorable tax treatment will likely be received [though that’s not iron-clad]. What he got was a cheaper strike price or basis, which means less overall “cost” in the event of exercise, and thus potentially more gain to him. Ironically, depending on the timing, there might actually have been a benefit to Apple, not the reverse that Crystal and others seem to assume. In the end, Crystal is complainign about the overall package; he is, as someone else noted, a gadfly who likes to point out how ridiculously high some executive comp packages are. Jobs gets paid a lot; Apple market share is improving, Apple image is at an all-time high, and my APPL stock is way, WAY up. The shareholder votes at Apple suggest that few, if any, are dissatisifed with Jobs’ performance or pay. I guess I am in their camp. So, maybe I don’t see it the same way Crystal does. At least his opinion is a relatively informed one, unlike yours.
Graef Crystal is supposed to be some sort of compensation specialist? It’s conspicuous that he omitted any mention of Jobs’ $1 annual salary. Nor does he give jobs due credit for saving Apple and building billions of dollars of shareholder value. His attack on Jobs was unbalanced and disproportionate to the facts.
I advise Steve Jobs to ignore Graef Crystal’s bleatings. There was no disclaimer in the article indicating that Crystal owns Apple shares in the first place. The Apple shareholders and customers say piss on Graef Crystal. We back Jobs 100%.
Frankly, I don’t give a rat’s behind about Crystal’s opinion. It’s none of his business. It *IS* my business. I own a piece of Apple. And for every $1000 I put in 4 years ago I now have roughly $10,000. I don’t care how much money Jobs makes or how it’s paid. As a stockholder I employ him to run the company. He’s done a fantastic job. What has Mr. Crystal done for anybody lately?
I don’t really care but to get this behind AAPL, Steve should be willing to cough up $100M. He can’t run AAPL from prison!
Poppycock,
Well, it appears you missed the point of the internal audit conducted by Apple in addition to your misunderstanding of the main issue here.
The practice of backdating options is legal. Everyone knows that and no one is debating that point. Nor is anyone making the argument that Jobs is being over compensated for his contribution to Apple’s success. Rather, the issue is that the procedure regarding his compensation was done secretly, which is not legal. Regardless of how much he is worth to the company, all compensation should be done in a manner that is completely legitimate. This is not an accusation made against Jobs himself. However, it would be a good gesture on Jobs’ part to distance himself completely from any association with any type of wrongdoing. Apple can always correct his compensation by paying him more later.
All I can say is I wish I could pick the lowest price of Apple stock in a 90 day period…
Ends does not justify the means. So Zeke, if Apple hadn’t performed so admirabley the last several years, would the tune change? Should it change? I personally think not. There’s nothing wrong with rewarding SJ handsomely. It should just be done very transparently. Moving around strike dates to eek the last dollar out isn’t. Boy, I wish I could do that…
We know that backdating options is legal so long as it is not hidden.
ALL of the info Crystal gave was PUBLIC info. He merely summarized points to support his argument.
So, how can Crystal conclude any wrongdoing if all of his information was public? Yes, Apple moved options around to put together a more fair compensation package for SJ. But they did it with full disclosure. As a shareholder, I knew about it. That’s what matters.
Finally, we need to put this whole thing behind us. And i’m gonna sue the next people who start a shareholder lawsuit on this issue. The law is about fairness to all shareholders, how is it fair to allow a small group who likely has divested the stock to crash the stock price for their own financial gain?
What the hell kind of name is Graef?
“how is it fair to allow a small group who likely has divested the stock to crash the stock price for their own financial gain?”
News flash: Apple to allow investors to pick lowest stock price in the 12 months since they purchased their stock and get cash rebate from Apple for the difference between that and what they paid.
Should ALL the shareholders give their profits back to Apple? sounds good to me… she must not be a Apple share holder, or any share holder for that matter, it sure sounds like she has no clue about the stock market.
“Should ALL the shareholders give their profits back to Apple? “
clueless? tt that’s you.
Worst case he should at least give back the ill gotten gains(Although only having to give back what you stole with no other sanctions has never been a very strong deterrent for thieves in the past).
“Put that one to the shareholders and I think I hear a roar of “thank you” and certainly no cries of “you robbed us”.”
For a while that was the roar from the Enron shareholders until they realized they’d been had. Then the roar changed.
Dishonesty is dishonesty. Wait until times get tough again at Apple, see how people react. Unless you’re OK with stealing provided you get your cut too, Jobs should go.
“The practice of backdating options is legal. Everyone knows that and no one is debating that point.”
That makes as much as saying burying people is OK. But it’s not OK unless they’re dead.
It’s only legal if you do it properly, they didn’t, so it’s illegal.
Then the tainted options were traded for stock. Sorry again, If you trade in a stolen car for another one, sure the new car isn’t “stolen” (and that’s Apples spin on things) but what you did sure isn’t right.
And let me make another point.
If you intend to account for them properly, there’s no difference between backdating options and issuing them today at a different lower strike price.
The only purpose of backdating options is to pretend that you paid out less money in compensation than you did.
So while “backdating options, properly accounted for” may not be illegal, there’s really no reason to ever backdate the options if you intend to recognise the compensation properly.
That in itself is enough to suggest that anybody who is backdating options is up to no good.
And back to the stealing the car analogy. You’ve commited the crime AT THE TIME THAT YOU STEAL CAR regardless of whether you later sell it for profit, push it off a cliff, sink it in a lake, abandon it at the side of the road, give it to a friend, or return it to the rightful owner.
So what Steve may or may not have done to launder the suspect options has no relevance, nor would returning the money now have any.
As a stockholder I am glad to have Steve’s income tied to the price of the stock. It is unfortunate that this all happened as it is a distraction from the great work this company has done over the last few years, largely due to the efforts of Steve Jobs. From what I read here and elsewhere I don’t believe Steve did anything wrong. I think Crystal’s article is really intended to give her an “angle” on this story that no one has taken so far, giving her great publicity. Its probably working. So, Kudo’s to Crystal for writing a creative and novel story – but I think substance of the article is vacuous.
Supplied,
I agree with the vast majority of what you say.
The question I’ve posed a few times (but haven’t seen any answer is): If options can be backdated to give extra profit through hindsight, why can’t the rest of us by stock at a point within the same window of time to best benefit us?…
[And please hold comments on the obvious legalality of it, this is an ethical question. To further the ethical arguement, it’s not like BoDs don’t have an insider’s perspective on where the stock price is headed, so they have a benefit that retail purchasers of stock certainly do not. The grant receivers of the CxO variety are already operating at an advantage the rest of us will never have, let alone the fliexibility in pricing the stock to the lowest price in a window of time.]
“If options can be backdated to give extra profit through hindsight, why can’t the rest of us by stock at a point within the same window of time to best benefit us?…”
The answer is that they can be “backdated to give extra profit”, but the equivalent is that a different strike price can be chosen which gives the option more “intrinsic value” which is the difference between the strike price (price you pay to exercise) and what the stock’s worth today.
But if “backdating” is chosen, that extra value being given to the person should be recorded in the company’s books, not hidden by the backdating and by pretending that the options given were only worth what they would have been if granted on the backdated date (where the possibility of future gains was still uncertain).
So for the company doing things properly, there’s no free lunch, either way the expense will be recorded.
Therefore there’s really no legitimate reason to ever issue backdated options.
So most instance where this happens is because a fraud is being perpetrated on the shareholders by backdating the options to avoid recognising that expense.
On why can’t you buy at the best price, The answer is because you would then have to find somebody who’d be prepared to sell it to you today for less than the market price. Not unethical, just highly unlikely.
Finally in the US it’s illegal to trade on non public important information (insider trading). However while the insiders theoretically can’t act on non public information, that’s a hard thing to police.