Peace
Cancelled
You are mis-quoting here.
The board meeting that "apparently did not actually occur" actually DID occur.The DATE of the board meeting is what's different.
Please stick with the facts.
Apple Releases Financial Results, Discusses Options Scandal
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You are mis-quoting here.
The board meeting that "apparently did not actually occur" actually DID occur.The DATE of the board meeting is what's different.
Please stick with the facts.
AidenShaw
macrumors P6
Picky, picky, picky.
The board meeting on date X did not occur - that fact is not contested.
A board meeting on another date did occur. Not contested.
Documents were falsified, lies were committed, perhaps even crimes were made.
But, please, the liars here are the Apple execs, not the MacRumors participants....
IJ Reilly
macrumors P6
No, I am direct-quoting here, from the LA Times article:
I can cite any number of other articles which say exactly the same thing, because they quote directly from Apple's statement. So yes, please let's stick to the facts.
IJ Reilly
macrumors P6
You should read Apple's disclosure in it's entirety instead of blurbs from newspapers.
Get back to me when you've read it.
I don't have to get back to you when I've read it, because I already have. From Apple's 10-K filing:
These are some of the theories you have tried to make,
1) The Enron Theory,
“This strains belief, and sounds suspiciously like the Ken Lay defense. It didn't work for Lay, where far more complicated financial dealings were involved, and I would not expect it to work for Jobs.”
2) The overzealous prosecution theory,
“They very well might want to make an example of somebody, preferably a prominent somebody, and Apple and Steve Jobs might just be the big fish they're looking for. We just don't know.”
3) Or the United Health theory,
“Or like this:
http://www.californiahealthline.org/...angedID=125882
Sound at all familiar?”
Aiden Shaw sure thinks so,
“Spooky, just replace "UnitedHealth" with "Apple Computer", and "McQuire" with "Jobs".
It's the same story - except that Jobs hasn't been forced to resign yet.”
4) The “His Goose is Cooked” Theory,
“Personal profit isn't the main issue. Correct financial reporting is. If it can be shown that Jobs knew that the back-dated options (not just his!) should have been reported as expenses in the company's balance sheet, then his goose is almost certainly cooked. The problem is, it should not be hard to demonstrate that he knew, or at least should have known. The effort to blame all of this on two departed execs is probably not going to be enough to save him if the feds decide to pursue this issue.”
5) Back to the overzealous prosecution theory,
The feds are not going to care two hoots about how important Jobs is to Apple.
6) The “I’m going broke theory.”
Bottom line: I can't afford wishful thinking. I've got too much of my own money at stake.
7) The “Hung by his Thumb Nails Theory”
“If Jobs gets hung by his thumbs by the feds over this, he will leave, and not because the board wants it to happen.”
8) The personal attack theory,
“All of which is more than you deserve to know.”
(Um why did you tell me your personal issues, if it’s more than I deserved to know?)
Like I said, I’m not a psycriatrest, so I can’t help you on that one. But you seem to get order of the post mixed up.
I’ll call that one the “Innocecnt Victom Theory.”
“Ah, but apparently we're not allowed to express our concerns as stockholders, lest we be accused of being "bomb throwers" and "conspiracy theorists."
Conclution: I’msorry but that seems lot of spin to me.
IJ Reilly
macrumors P6
This is becoming surreal. A couple of days ago, you joined this thread saying you knew nothing at all about stock options. So a few of us, myself included, patiently explained the issues. Now, just a few days later, you are an expert; in fact, you're beyond expertise -- you've apparently become an authority, someone who not only doesn't need to listen, but who can confidently tell others what they really meant to say. That's quite a transformation.
WildPalms
macrumors 6502a
Very well said Peace
Its sad that some other members in this forum will make statements simply to stir up some drama for their own amusement, incorrect as it usually is.
AidenShaw
macrumors P6
Very well said Peace
Its sad that some other members in this forum will make statements simply to stir up some drama for their own amusement, incorrect as it usually is.
Our "drama" is pretty obvious:
- Not cashing in illegally granted shares does not erase the crime
- 10 million shares at $85 per is in fact fairly close to $850 million (although Jobs has already cashed in 4.5 million shares)
- The fact that the $84M restatement is no more than a rounding error in Apple's bank balance doesn't make the crime less important
I feel sorry that several here can't allow themselves to consider the fact that Apple has committed a crime in this matter. We can discuss opinions on whether it is possible that Jobs will have to resign, but Apple itself admits the crime in its filing.
(I realize that there is a difference between "civil" and "criminal" malfeasance, and I'm not sure whether Apple's wrongdoings are in fact criminal.... But, since I'm only interested in the drama, I'll use the word "crime"
)Our "drama" is pretty obvious:
- Not cashing in illegally granted shares does not erase the crime
- 10 million shares at $85 per is in fact fairly close to $850 million (although Jobs has already cashed in 4.5 million shares)
- The fact that the $84M restatement is no more than a rounding error in Apple's bank balance doesn't make the crime less important
I feel sorry that several here can't allow themselves to consider the fact that Apple has committed a crime in this matter. We can discuss opinions on whether it is possible that Jobs will have to resign, but Apple itself admits the crime in its filing.
(I realize that there is a difference between "civil" and "criminal" malfeasance, and I'm not sure whether Apple's wrongdoings are in fact criminal.... But, since I'm only interested in the drama, I'll use the word "crime"
my take:
here, i agree with you, it is dirty. the fake board meeting happened because Jobs had a boatload (millions) of stock options that were worthless since the stock price had dropped. As we know an option at $45 is not very useful when the stock is trading at $18. So they faked a meeting and backdated 7.5 million options to give him something of value. (The guy was making $1/yr for a salary, all other compensation had been awarded in these worthless options. They felt bad for him. He had nothing to show for his hard work.) But he came up with a plan and surrendered all of his options (the worthless ones & the 7.5 million in question) for the restricted stock which DID become extraordinarily valuable.
Let me restate what occurred. He cashed in worthless options and dishonestly backdated options for what became 10 million shares of reserve stock at a $7.45 share exercise price. This totals $74.5 million on the books for Apple. But when the stock vested in March, Apple was trading at approx. $66. Thus, the end sum was that Jobs traded worthless options & the questionable backdated options for what ended up being valued at ($66-$7.45)*10 million shares. So what ended up being $74.5 million on the books for Apple ended up being in $600 million (as of March '06, much more now & before taxes) range in Jobs's pocket. Brilliant.
The media frenzy and the restatement only consider the 7.5 million options that were eventually cancelled, not the huge sum of money Jobs pocketed. The bottom line is that the guy got crazy rich on this. But at the same time, he did a hell of a job for a $1 a year salary and some worthless options. He did deserve some compensation, and I say he got it. Is it illegal? No. Does the whole thing smell funny? Sure. Will anything further come of this? No. Jobs is safe.
AidenShaw
macrumors P6
Actually, this is incorrect.
The "board meeting" that never occurred was where Jobs was awarded the 7.5M shares (at a back-dated price) that became underwater.
The meetings where these options (and 20M others) were exchanged for a restricted grant are not under suspicion.
I'm confused on this - some of the reports say that the 10 million (split-adjusted) shares were a grant, others say that they were options with an exercise price.
I believe the former - that the grant was free and clear, when they vested after three years, Jobs owned the stock without having to pay $7.45 per share.
(I believe that the stories about the tax charge supports this. If you have options, any profit is claimed when the options are exercised. With a grant, when they vest you own the stock, and any capital gains are taxed. You don't have to exercise options when they vest, but a grant is automatic. Since Jobs sold 4.5M shares to pay the tax bill exactly three years later - I don't believe that these were options with an exercise price.)
There's nothing illegal about giving options at whatever price. As long as the "cost" of the options is recorded in the company's books correctly, it's legal.
The illegality here is that the books were cooked so that the "cost" of the options was recorded at a date other than the true date. An even more important crime is that records were falsified to make it appear that the options were granted at a meeting, when in fact no such meeting ever occurred.
The $84M restatement reflects these criminal acts - by claiming incorrect dates for options grants, Apple inflated their profits by this amount. The $84M charge corrects the books for these acts. It does not erase the crime of back-dating the options, nor the crime of falsifying the records about the board meeting.
Unclear.
The idea that "Nobody is above the law" has taken down presidents of the US, with consequences far greater than replacing the CEO of a medium-large company. (Apple is 159 on the Fortune 500, UnitedHealth is #37 - and earlier posts described how their CEO was forced out over options irregularities.)
The Feds could decide that it is important to nail Jobs to reinforce the idea that "nobody is above the law" also applies to CEOs, no matter what. The L.A. Times article focuses on this aspect of Apple's crime.
Will it really hurt the US economy if Jobs is given a striped suit to wear? No. People with investments in AAPL will be hurt, but that was a risk they took when they invested in the company - they made the mistake of believing that Jobs & crew were honest, and they'll pay for that mistake. Overall, a little blip on the economic radar if Apple's stock drops by 50% - or if a Jobs-less Apple loses its way and withers.
IJ Reilly
macrumors P6
Well, I don't think there's any appreciable chance that Steve Jobs, or anybody else for that matter, will "do time" for this. But I think it's likely that the SEC will want to make an example out of somebody at some company, to drive home the point that messing around with the books of a public company to feather the nests of the execs and board members is unacceptable. Other companies have apparently been far more egregious in their flaunting of the reporting rules, at least in terms of the dollar amounts involved, so one would hope they'd score higher than Apple on the SEC's hit parade. The problem is, we just don't know what the SEC is thinking, and we're probably not going to know for a few more months, at least.
aiden, you are having a really difficult time reading/understanding my posts. let me clear it up for you.
okay. the fake board meeting is where he was awarded 7.5 million in backdated options. But it happened BECAUSE all he had were the worthless options he had been previously granted. what you said in response bears no relevance to my post.
the $7.45 exercise price is not an option price. when apple grants restricted stock it is not just "free." they have to assign a value to the shares they are giving away. otherwise it would "cost" the same ($0) to grant one share as it would to grant 5 million shares. the $7.45x10million=$74.5 million is what goes on Apple's books for accounting purposes. Jobs did not pay anything for the stock. The importance of the $7.45 is that is a basis to subtract from the current share price. By subtracting it, you see exactly what Apple gave to Jobs when they awarded him the restricted stock. Otherwise, this restricted stock and most importantly the current share value associated with it would still be theirs, not his. if you aren't following this, i give up...
what i am refering to as not being illegal is the fact that they accepted the worthless options and the options under suspicion for the 10 million shares of restricted stock. the backdated options did have value. but in the end, the deal Jobs struck was the equivalent of me showing up to your house and buying it for $5 and a pencil with no lead. It is not illegal to make a bad deal (even purposely). backdating options and faking a board meeting are certainly unethical moves. however, from the little i know of corporate law, the unethical rarely equates to illegal. you can be fined for unethical behavior, but they are rarely prosecuted. believe it or not, there are not as many real laws regulating accounting and business as you might think or hope. have any legal charges been filed in this case? hmmm. no.
Steve Jobs is not safe because he did nothing wrong. He is safe because they cannot prove he did anything wrong. We can argue all day about who knew what and when, but the premise that governs our legal system remains.
Aiden, please, before you respond with your misinterpretation of yet another post in this thread, please read it again and then again.
okay. the fake board meeting is where he was awarded 7.5 million in backdated options. But it happened BECAUSE all he had were the worthless options he had been previously granted. what you said in response bears no relevance to my post.
the $7.45 exercise price is not an option price. when apple grants restricted stock it is not just "free." they have to assign a value to the shares they are giving away. otherwise it would "cost" the same ($0) to grant one share as it would to grant 5 million shares. the $7.45x10million=$74.5 million is what goes on Apple's books for accounting purposes. Jobs did not pay anything for the stock. The importance of the $7.45 is that is a basis to subtract from the current share price. By subtracting it, you see exactly what Apple gave to Jobs when they awarded him the restricted stock. Otherwise, this restricted stock and most importantly the current share value associated with it would still be theirs, not his. if you aren't following this, i give up...
what i am refering to as not being illegal is the fact that they accepted the worthless options and the options under suspicion for the 10 million shares of restricted stock. the backdated options did have value. but in the end, the deal Jobs struck was the equivalent of me showing up to your house and buying it for $5 and a pencil with no lead. It is not illegal to make a bad deal (even purposely). backdating options and faking a board meeting are certainly unethical moves. however, from the little i know of corporate law, the unethical rarely equates to illegal. you can be fined for unethical behavior, but they are rarely prosecuted. believe it or not, there are not as many real laws regulating accounting and business as you might think or hope. have any legal charges been filed in this case? hmmm. no.
Steve Jobs is not safe because he did nothing wrong. He is safe because they cannot prove he did anything wrong. We can argue all day about who knew what and when, but the premise that governs our legal system remains.
Aiden, please, before you respond with your misinterpretation of yet another post in this thread, please read it again and then again.
devman
macrumors 65816
You say
Then you say
And then you say
Whoah dude. You're in a loop and your head just disappeared up your...
(p.s. bias duly noted)
FYI. http://www.cfo.com/article.cfm/7239155/c_7932402
No you don't. You enjoy what you do here.
Then you say
And then you say
Whoah dude. You're in a loop and your head just disappeared up your...
(p.s. bias duly noted)
FYI. http://www.cfo.com/article.cfm/7239155/c_7932402
No you don't. You enjoy what you do here.
AidenShaw
macrumors P6
Thank you for the link, it's good background for this discussion...
http://www.cfo.com/article.cfm/7239155/c_7932402
When Is Backdating a Crime?
There is no statute that explicitly outlaws backdating stock-option grants, but it seems virtually impossible to backdate options and achieve the ultimate goal of putting grants "in the money" without first deliberately falsifying documents and then covering up the sham.
There is no statute that explicitly outlaws backdating stock-option grants, but it seems virtually impossible to backdate options and achieve the ultimate goal of putting grants "in the money" without first deliberately falsifying documents and then covering up the sham.
AidenShaw
macrumors P6
Thanks. Yes, I did misread what you were saying.
Also, thanks for clearing up what "exercise price" meant.
Unless somewhere there's an email message....
IJ Reilly
macrumors P6
I am almost 100% certain that you are incorrect. The phantom board meeting controversy involves the same back-dated options which later were turned in for a grant of restricted stock. Not that it really matters.
This I believe represents a fundamental misunderstanding of Jobs' vulnerabilities. A CEO is supposed to know what is going on in his company. Ignorance is a very weak defense, especially in this case. If the SEC decides to pursue this matter, the crux of the critique insofar as Jobs is concerned is that the plea that he didn't understand the "financial implications" of back-dating is quite implausible. Jobs is vulnerable because he was in charge when the misdeeds went down. It's as simple as that.
this exactly what i am saying. please re-read my posts.
i agree with what you are saying in spirit and principle. but he isn't stepping down and there does not appear to be any available evidence pointing to Jobs' direct involvement or knowledge, which is why i say he is safe from harm. i agree with your second to last sentence, but the misdeeds would need to be much bigger, in my humble opinion, for him to be pressured out.
IJ Reilly
macrumors P6
I'm not totally certain, but I don't think we are saying exactly the same thing. The faked board meeting wasn't claimed because the options had gone under water. It was faked because the price was lower on that day in October then it was on the date when the grant was actually finalized in December. The options still went under water, and were cancelled in favor of an outright grant, but that was later. But again, not that it much matters...
Of course he's not stepping down -- the board exonerated him. But as I've pointed out before, Apple exonerating their own is not likely to cut much ice with the SEC. As for what they are thinking, we just don't know, and probably won't know for months. I hope Apple uses that time to demonstrate to investors that Apple has broader and deeper leadership than just the one person, so we don't have to get the flu every time Steve catches a cold.
we are saying the same thing. maybe you missed my previous posts in this thread. we agree that the purpose of the fake meeting was to backdate the options. but the point i made is that the only reason they granted him the 7.5 million more options, in the first place, was because the 10 million options he already had (and traded in along with these in question for the restricted stock) were not worth anything because the stock had dropped 80%.
The 10 million options were worth nothing. he makes $1 per year. They had to give him something. Hence, the 7.5 million more (backdated) options that might be worth something some day. My point is why they gave him more options period. And yes they were traded in, along with the worthless options, for the restricted stock.
and this does matter. he gave them almost nothing in return for the restricted stock that vested at around $660 million in March. maybe you didn't see my other post.
IJ Reilly
macrumors P6
Yes, I see. Lots of posts in this thread -- difficult to keep track of everything everyone has said. As for it mattering, I think this is a point where we will just have to disagree for the time being, at least until the SEC rules.
devman
macrumors 65816
You're welcome.
dextertangocci
macrumors 68000
I have no idea what that all means!
AidenShaw
macrumors P6
Can Apple Thrive Without Steve Jobs?
http://www.eweek.com/article2/0,1895,2078503,00.asp
Can Apple Thrive Without Steve Jobs?
By David Morgenstern
January 3, 2007
Opinion: Apple is defending CEO Steve Jobs as the company is under investigation by the feds. To some, he is Apple. But could the company make do without its very public leader?
...
http://www.eweek.com/article2/0,1895,2078503,00.asp
Can Apple Thrive Without Steve Jobs?
By David Morgenstern
January 3, 2007
Opinion: Apple is defending CEO Steve Jobs as the company is under investigation by the feds. To some, he is Apple. But could the company make do without its very public leader?
...