Filed under: Apple Financial, Steve Jobs, Bad Apple
Does Steve owe Apple shareholders $85 million?
This stock options business is getting messy, folks. As you know, Apple has just recently completed an investigation into some fishy accounting practices in reference to some stock options that were handed out. Fred Anderson, former Apple CFO, has resigned from the board, and some of Apple's financial statements will need to be restated using information uncovered by the investigation.The investigation states that Steve Jobs didn't benefit from any of this tomfoolery, nor did he know about it. Graef Crystal, writing for Bloomberg, doesn't think that is the whole story. Crystal took a look at Mr. Jobs exchange of certain stock options (i.e. Steve could have bought a set amount of Apple stock for a certain price) for actual shares and thinks that something funky is going on. I'm not going to explain the whole process, read Crystal's article for that, but the long and the short of it is that Crystal contends that Steve made out like a bandit thanks to some creative accounting. How much did Steve make? Potentially $85 million, that being the difference between the value of the stock Steve received, and the value of the stock that he would have received had he not exchanged his options for actual shares.
Crystal suggests that Steve should either give back the $85 million that he shouldn't have gotten in the first place, or refuse any future compensation from Apple.
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Reader Comments (Page 1 of 1)
bago said 8:15PM on 10-11-2006
If jobs goes , apple is done..............
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Derrick said 8:12PM on 10-11-2006
As a shareholder, I would say SJ is not motivated by money ... while he is a billionaire ... most of the fortune is due to the sale of Pixar.
Consider the following:
- his annual salary is $1
- the only time he has sold APPL shares in the past decade is to pay his tax bill
- APPL shares have appreciated several hundred percent since his return
He is invaluable to Apple and deserves whatever compensation comes his way.
This article is simply an attempt to sensationalize and capture eyeballs - pure FUD.
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Jason said 8:31PM on 10-11-2006
I'm no whiz at stock option accounting, but I would like to meet those shareholders who somehow "lost" $85 from the pricing difference mentioned in the article. The market price of the stock is completely different from the strike price of the option...
The whole article seems to jump to conclusions a bit too quickly....
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wilkie said 9:17PM on 10-11-2006
i agree with Derrick and bago, Steve's salary is nothing compared to what other CEOs get, so if he DID owe anything (which he doesn't in my view) he would have more than paid it back already in what he has forgone in salary all these years. and bago is very right, steve jobs is a very big part of apple, and if he leaves, the love is doubtful to hang around.
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bob said 9:25PM on 10-11-2006
everything he got, i think is well earned, and cheap at half the price!
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Catt said 9:43PM on 10-11-2006
The article is pure Tomfoolery and what's with all this Anti Apple banter on TUAW of late. First I read some crap about the Apple cube in NYC offending Muslims
now this suggestion that Steve Jobs ripped off shareholders. What's with all this can we get back to cool Mac apps, tips and tricks, UI enhancements, new Apple/ Mac products and the like.
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Brian said 9:55PM on 10-11-2006
I empathize with the Apple faithful in that Mr. Jobs has increased the value of stockholder wealth many times over since his return. But, ill-gotten compensation is what it is….if that’s what it is. I have no problem with creative accounting as long as it’s legal. Unless, we really understand the financial transactions in view of the tax-code, amongst other statutory issues, we shouldn’t jump to anyone’s defense based on our emotions.
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Brent said 9:53PM on 10-11-2006
Considering most Mac users and their chronic fudging of numbers for the sake of market share, it comes as no surprise they'd give benefit of the doubt to fuzzy math that might keep Steve in a good light.
The naivety of business-related posts here is practically tragic.
He certainly deserves whatever legal compensation he's earned. However, if that compensation is, in fact, illegal, I can assure you that his forgoing any real salary at Apple won't balance the scales of bilking shareholders in the eyes of the SEC.
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reinharden said 11:18PM on 10-11-2006
What the author fails to take into account is that this particular stock grant is the least suspicious of those thus far cited. January 12, 2000, was the low price for the month; however
One, on January 19 (the same date that Apple reported earnings), Apple announced (see ) that Jobs had received the grant the week before. This rather severely limited the possible dates.
And two, had Jobs kept those 10 million shares, they would have turned into 40 million options with an exercise price of $21.80. At the current price of $73.23, those options would be worth over two *BILLION* dollars. Add to that the 7.5 million other options he handed in (which post split would be another 15 million shares with an exercise price of $9.15) and he would have had another 960 million dollars.
So the options he didn't keep would have grossed him *THREE BILLION* dollars.
So, odd though it sounds, I don't begrudge the man trading in his options for restricted stock since, at the moment, it's cost him 2.5 billion.
reinharden
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reinharden said 11:32PM on 10-11-2006
The missing link in my previous post is
http://www.apple.com/pr/library/2000/jan/19ceocomp.html
reinharden
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Rodrigo Vazquez said 1:35AM on 10-12-2006
How much Michael Spindler and Gil Amelio did earn for almost kill Apple?
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Johnny Ringo said 11:00PM on 10-12-2006
Crystal's article wrongly assumes that shareholders would not want to reward Jobs. Apple is not a charity, and I don't think anyone expects Jobs to work for free--although he pratically did that when he came back to Apple in 96. It is obvious that the Board wanted to reward Jobs with stock (an ownership stake--not cash). The fact that they exchanged options for restricted stock shows that they reward level was what the board wanted him to have. Shareholders, obviously agreed at that time--and I'm certain they still do. Cryrstal's article is asinine, and a thinly veiled attack on Apple for not paying dividends--which is a separate issue.
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PaperQueen said 2:35PM on 10-12-2006
Hmm. Wonder if Graef Crystal typed the original article on a PC or a Mac...?
Sorry. Couldn’t resist the question. (grin)
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