Apple CEO Steve Jobs getting special treatment in options backdating scandal?

“An internal inquiry gives him a pass in Apple’s backdating scandal—but raises questions about whether [Apple CEO Steve Jobs] is getting special treatment,” Peter Burrows reports for BusinessWeek. “In Silicon Valley, Steve Jobs is admired for many things: his storybook resuscitation of Apple Computer, his billion-dollar-plus fortune, his rock star status as the driving force behind iconic products such as the iPod. Near the top of the list is Jobs’s famed ability to spin what admiring techies refer to as a ‘reality distortion field’ to win consumers over to the Apple view of the world.”

Burrows reports, “But will it work with government regulators? As Jobs prepares to wow the masses once again with his keynote at the annual Macworld trade show on Jan. 9, skepticism abounds among options experts, as well as techies, that the Apple chief executive is totally in the clear over his role in resetting start dates for company stock options. A report issued on Dec. 29 by a two-member special committee, composed of no less than former Vice-President Al Gore and tough-minded finance veteran Jerome B. York, “found no misconduct” by Jobs or other managers. Yet it acknowledged that he knew about some of the 6,428 option grants handed out between late 1996 and early 2003—roughly 15% of the total in that time—that were improperly dated to give employees an artificially low price.”

Burrows asks, “Is the world ready to see one of its greatest innovators sacrificed at the altar of the good-governance gods—especially when it’s not clear how he was enriched or his shareholders damaged? …The reward for shareholders: Apple’s stock price has climbed 1,025% since Jan. 1, 2001, just before the iPod era began, to a total market value of $72 billion. That’s why few expect Apple’s board to push Jobs out even if the government does move against him. Some suggest that it would hang tough with him even if criminal charges were filed by the Justice Dept., which is a remote possibility for many reasons.”

Burrows reports, “Says Harvard Business School management professor David B. Yoffie: ‘Obviously, these are inappropriate activities that anyone should be ashamed of. But it wouldn’t be in shareholders’ best interests to have Steve Jobs leave for something that happened four years ago that didn’t have a material impact on their holdings.’ …Analyst Gene Munster of Piper Jaffray estimates if Jobs were ousted, Apple’s stock would take an immediate hit of up to 20%, roughly $14 billion, and continue south as investors considered the longer-term implications.”

Burrows reports, “Says former SEC Commissioner Joseph Grundfest, a professor at Stanford Law School: ‘Steve Jobs is a national treasure, and Apple has to do everything it can to keep him actively engaged. If Martha Stewart can stay at her company, there should be no issue—even in the worst case—in designing a structure that keeps Steve Jobs at Apple.'”

Full article with much more here.

[Thanks to MacDailyNews Reader “joe architect” for the heads up.]

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Apple to investigate stock option grant ‘irregularities’ made between 1997 and 2001 – June 29, 2006


  1. Martha Stewart, a convicted felon, served time, still at it, still keeping the stock up… and her face is even more attached to her products!

    Steve is fine.

    The worst that could happen is some form of censure. As I said in previous thread…

    Eventually of course he will have to pass the baton.

    My fear is having corporate types taking over what has become a huge, hulking company with thousands of employees. That will make future leaders want to “manage” the thing, not lead.

  2. Martha Stewert makes Janet Reno look like a Victoria’s Secret model, although she probally uses Mac and Reno uses a Dell. Did everyone hear the rumor that Steve Jobs recently got gas when he ate some chili? I think this might make aapl go down a cent or two, and I’m sweating minute to minute until the Mac expo and then the day after that’s over with I’ll try to surf and dig out another rumor to worry about…

  3. Keep in mind everyone – options backdating is not actually illegal. Frowned upon, apparently, but not illegal. On the other hand, insider trading (Martha’s slip) IS illegal. (however I think she was hit pretty hard for it as compared to other creeps like the Enron gang who stole people’s savings and living and trashed the company for their own profit.)

  4. Can somebody–ANYBODY–tell me why the serious financial “irregularities” of Michael Dell’s company have not been highlighted in the mainstream media and business publications?

    Why is Apple the only company being trounced here, there, and everywhere? Has DELL filed its long-delayed “amended” reports yet? If not, WHY NOT? It’s clear to me at least: The crap is about to hit the fan with that beloved (beleaguered?) institution?

    And THEN let’s see what the WinFanBoys say!

  5. I DID IT! I figured out the pattern,

    and now I will share it with you all.

    This will save you time: If the headline

    ends in a question mark then the whole article

    is probably a complete waste of your time.

    Got it? good.

  6. @Thorin (sidebar – what’s with all the LOTR handles?)

    Exactly right. And just the sort of thing you see on… *certain* news channels.

    “Bush best president ever?”
    “Did Clinton eat babies?”
    “Dems a tool of Beelzebub?”

    One of those, I didn’t make up.


    MW: ‘and’ (now we my let the political poo-flinging begin)

  7. Salieri,

    I’m not so sure they get the “I grant you absolution” reference. It’s great to hear from you again, though.


    MDN word – “increase” as in increase your number of Apple shares. The ride only gets better from here on out!

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