Bloomberg: Apple’s Jobs should give back the $85 million

“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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33 Comments

  1. 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.

  2. 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.]

  3. “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.

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