Apple Stock Options Fallout Continues

[whatever]

Even so, are the investors still going to trust him?

Trust him?

Steve Jobs is as important to the Apple brand as the iPod and more important their the Macintosh.

We all saw what happened to Apple when he was gone and we all know how Apple would appear to be like without him (a ship without a rudder).

Like it or not, he is Apple.

 

[whatever]

CEo's worring about towns People Please these guys worry about two things, their pocketbooks and the stockholders and no one else. I dont think Apple was giving a hoot about those chineese working 15 hr days until someone did some poking around. Dont spin corporate greed into morals. Apple is worried about one thing $$$. Corporate America doesnt worry about any town,city or state unless there is money in it for them period.

So let's see if I have this right. You have issues with democracy and capitalism. Let me guess you're agains organized religion too.

It seems like your perfect society would be communism. Which I would I be the first one to admit is a beautiful concept, except for it's one giant flaw, human nature.

 

[Swarmlord]

<snip> The CEO class is way, way, way, overpaid,over compensated and I agree the situation is out of control.

On this we both agree. If incentivizing employees with options that yield multiples of their salary is such a good thing, then it should apply to all the employees. It does make me ill to see employees getting a bonus that is a small, fixed percentage of their salary (say 3%) and the compensation package given to a handful at the top is 40 times their base salary.

 

[IJ Reilly]

Like it or not, he is Apple.

I understand your point, but in reality, we'd better hope not. One of these days he's going to retire. Apple does need to learn to get along without Steve Jobs, and the sooner the better. As an investor, I'm getting pretty weary of seeing the stock price gyrate madly every time a new rumor about Steve starts the rounds. Apple will never be a fully mature company until it can operate successfully without a god-head figure like Jobs.

 

[steveh]

So many companies do this sort of thing all the time....

Is it really a crime anymore?

Actually, it's the other way around; until quite recently, it wasn't seen as an accounting problem at all.

 

[Dont Hurt Me]

So let's see if I have this right. You have issues with democracy and capitalism. Let me guess you're agains organized religion too.

It seems like your perfect society would be communism. Which I would I be the first one to admit is a beautiful concept, except for it's one giant flaw, human nature.

No we just need some balance, at the moment everything is for these boardroom guys even if the company tanks these guys reap millions. Thats wrong. Im for spreading the wealth a little more throughout a company rather giving 99.9% to the boardroom clowns. Capitalism can run amok, and it has.

 

[steveh]

You don't spend the cash for a team of reps unless you need the protection.

These days, because of the possible consequences, you get representation even if you're pure as the driven snow.

While criminal law, in theory, assumes you're innocent until proven guilty, in tax-related issues, you have to prove that you're innocent, it's not assumed.

 

[whatever]

Just for example I have a very well off brother in law who works for a major company. He made big money shutting down call centers in the U.S. and moving them to India and Canada. Apple has talked to him about their call centers as matter of fact. Its called the selling out of America, firing americans and moving overseas and then the CEO types get even fatter checks. When we worship only the $$$ and little else we have problems. The CEO class is way, way, way, overpaid,over compensated and I agree the situation is out of control.

What you described is called Off-shoring. A big trend in 2003-2005, but has since proved to be a bad decision. Although it saved many companies money (we actually discovered it was cheaper to keep our call center in Hagerstown, Pennsylvania, however our Dutch owners who are two years behind the times are still considering the move which will cost the company over $20,0000 a month more, smart huh) to move their call centers to India, ultimately it was discovered that the customer experience was not up to par. So companies have already begun to reverse the trend.

As I mentioned before would you prefer some employees to lose their jobs, only to make a company stronger or keeps things the way they are and have the company go out of business? These are the tough decisions that CEOs have to make!

 

[steveh]

These grants were from 1998 to 2003 before the rules change.

It may have been in another article where I read about the back dating being legal. Perhaps also only before the rules change.

As I recall the rules change is what prompted Apple to go back and start restating/reevaluating.

Yep. That's part of what's so confusing about the whole affair.

Accounting/tax law is pretty perverse; in other areas of law, it would be a case of "ex post facto", which is frowned on. It's even mentioned in section 9 of the Constitution: "No Bill of Attainder or ex post facto Law shall be passed."

Oh well.

 

[whatever]

I understand your point, but in reality, we'd better hope not. One of these days he's going to retire. Apple does need to learn to get along without Steve Jobs, and the sooner the better. As an investor, I'm getting pretty weary of seeing the stock price gyrate madly every time a new rumor about Steve starts the rounds. Apple will never be a fully mature company until it can operate successfully without a god-head figure like Jobs.

As an Apple shareholder you be happy that the stock gyrates at all. A flat stock is a dead stock.

Five years ago Apple was dead in the water. They had a plan and they managed to carry out that plan. Most of us saw this happening and knew what was coming, but Wallstreet didn't care, because Apple was dead to them.

Apple is a fully mature company.

They were at the brink of elimanation from the game once and came back. If that's not a mark of a mature company what is? Google? Dell? Novell? Lotus? RC? Pepsi? Kenner?

Please help me out?

 

[Dont Hurt Me]

Whatever, I agree with what you say here. For example I have had to use Apple support and was able to talk to an American and it was a good experience. Had to talk to Dell and I was clearly talking to a Indian and the whole process was a struggle.

I dont mean to paint with such a wide brush but I think U.S. companys should be "Forced" to keep a percentage of production,manufactoring whatever in the U.S. What that amount is I dont know but say for example things with China goes sour and they invade Taiwan? Apple would be crapping bricks! so would a lot of companys. Going a little off topic now I know but building everything in China including China's military isnt a good thing for the U.S. Think about China for a moment, what would Apple do? just a few points that chasing the biggest profit margin isnt allways in everyones interests.

 

[jbernie]

Another perspective which suggests that Steve DID NOT benefit - he surrendered that grant w/o exercising it:

http://today.reuters.com/news/artic..._RTRIDST_0_APPLE-OPTIONS.XML&rpc=66&type=qcna

That would be like stealing a brand new tv, still in its box, from a store, sitting on it for a month without opening the box and using the tv, and then returning it (guilty consience) and saying you shouldn't be arrested for your crime as you didn't benifit.

I would be astounded if Jobs was awarded 7.5 million stock options and he was not made aware. Maybe with as many shares and share options as he has he lost count? Whats a 7.5 million share options between friends? Even with only a $20 per share gain that is $150 million in profit before taxes. Not exactly small change given AAPL shares of late.

 

[IJ Reilly]

As an Apple shareholder you be happy that the stock gyrates at all. A flat stock is a dead stock.

Five years ago Apple was dead in the water. They had a plan and they managed to carry out that plan. Most of us saw this happening and knew what was coming, but Wallstreet didn't care, because Apple was dead to them.

Apple is a fully mature company.

They were at the brink of elimanation from the game once and came back. If that's not a mark of a mature company what is? Google? Dell? Novell? Lotus? RC? Pepsi? Kenner?

Please help me out?

Trust me, I'm fully aware of Apple's history. I became an investor in 1997 when Steve returned. I suspected that this would be a turning-point for the company and happily I guessed right.

But I recognize that Apple is still not a fully mature company. A fully mature company nurtures leadership within its ranks, such that the culture created by its founders is passed along and sustained after they leave. Long after they leave -- even after they are dead and buried. As nearly as I can tell, this is not occurring at Apple, and as someone with a lot of money tied up in the stock, it worries me. It also worries the markets, which as we can so plainly see, hang breathlessly on every rumor about Steve. This should also worry anybody else who cares about Apple's future, which won't be secure until a succession of leadership is in place. That's corporate maturity. Dependency on one person is not.

 

[IJ Reilly]

I would be astounded if Jobs was awarded 7.5 million stock options and he was not made aware. Maybe with as many shares and share options as he has he lost count? Whats a 7.5 million share options between friends? Even with only a $20 per share gain that is $150 million in profit before taxes. Not exactly small change given AAPL shares of late.

Aware of what?

 

[hagjohn]

What you described is called Off-shoring. A big trend in 2003-2005, but has since proved to be a bad decision. Although it saved many companies money (we actually discovered it was cheaper to keep our call center in Hagerstown, Pennsylvania, however our Dutch owners who are two years behind the times are still considering the move which will cost the company over $20,0000 a month more, smart huh) to move their call centers to India, ultimately it was discovered that the customer experience was not up to par. So companies have already begun to reverse the trend.

As I mentioned before would you prefer some employees to lose their jobs, only to make a company stronger or keeps things the way they are and have the company go out of business? These are the tough decisions that CEOs have to make!

Seems to me that if you need to outsource our employees, your doing a lousy job at running your company.

 

[Peace]

Here's what probably happened..

The financial Times said phone minutes were falsified.This tells me there was a BOD conference call to offer Jobs the 7.5 million option.Jobs was on the phone assuming all the other directors were too.Jobs took the option.
Later the two people that quit did so because they falsified the phone conference minutes.Jobs found out about this later and then turned down the option NOT because of any devaluation of stock but because he found out the whole board wasn't in on the conference call.Then it hit the fan.Apple started an internal inquiry and later the CFO quit as did the corporate lawyer.The two people that probably falsified the phone minutes...

If it is shown that Jobs did indeed return the option because of this he is off the hook.
On the other hand if it is discovered that Jobs was in on it from the beginning Apple is going to have a new CEO after January.And it won't be Steve Jobs.

Lets hope this was an innocent screw up on his part..

 

[kalisphoenix]

So let's see if I have this right. You have issues with democracy and capitalism. Let me guess you're agains organized religion too.

It seems like your perfect society would be communism. Which I would I be the first one to admit is a beautiful concept, except for it's one giant flaw, human nature.

I have issues with democracy and capitalism and organized religion, too 8)

Democracy is just plain wretched. "Let's do whatever the greatest number of people want to do!" Bright ****ing idea. The majority of people eat at McDonald's, have no interest in reforming the two-party system, believe in God, and so forth. This means that the minority is completely at the mercy of the majority -- an example being that homosexuals are not allowed to be legally married.

Capitalism is the pits. "Let's do whatever makes a profit!" Crime skyrockets. A black market proliferates, with legality of the traded material often hinging on monetary interests rather than objective judgments -- witness marijuana vs. alcohol and cigarettes. Money (and therefore, profitable activities) determines public policy -- note frequency of American/European involvement in certain regions of the world compared with others. Conspicuous consumption (for example, a $15 000 purse or a $30 000 wedding ring) takes precedence over the lives that could be saved with that same amount of money. According to almost every ethical system (save that of Objectivism, the chief philosophical champion of capitalism), this is evil. Technological advancement is touted as a benefit. Meanwhile, global climate change seems inevitable, and is inevitable because financial concerns pre-empt societal concerns such as, you know, life.

And organized religion is the pits. Why? Don't ask me, God told me to say that. Perhaps you'd better pray for an explanation from Him directly. Here, kneel on this rice and flagellate yourself until He reveals Himself.

In general, I don't see anything wrong with communism. As Milton Friedman himself said, collectivism is very much in line with human nature. Free-market capitalism is as opposed to human nature as anything. No, really, he said that. So we work for the common good! Excellent. Within that constraint, we encourage competition. And we provide public healthcare, public education, and public suffrage so that each individual is provided with an equal footing for success in the public arena. People don't get exploited, everyone lives more or less comfortably, and their charitable donations to third-world countries are an order of magnitude greater than that of the US! In addition, their citizens are better-informed, vote more often, are more secularized, and, to top it off, are pretty damn foxy!

Jesus Christ! That sounds... like... Iceland or something!

Damn those Scandinavians!

 

[noonespecial]

I just read this article:

http://www.ft.com/cms/s/801e1b82-9605-11db-9976-0000779e2340.html

and came here to make sense of it and found this thread already going.

According to the article Jobs was given 7.5 million options at 18.30 a share. So, does that mean at any time he could sell the stock without really having bought it to begin with? An option is essentially the option to sell a stock if the price is favorable?

If that understanding is correct, do you at the point you sell it gain the profit of the value of those shares, or the difference between the current price and what the shares were given to you at?

And if it is the latter, is that why they backdate to give the employees the lowest possible price?

If Jobs really has committed a crime, it would be rather ironic given his comments about karma and purchasing legally, and that every iPod says "Don't steal music."

The options in this case were a right to buy the stock at $18.30 a share; 25% of the 7.5 million shares vested on the grant date of October 19, 2001. Considering that Apple's stock was greater than this for almost every trading day between then and mid-2002, Jobs could have made money by exercising his options: buying for $18.30 and reselling on the open market. However, he didn't do this. As mentioned, his options went out of the money past the midpoint of 2002, when Apple's stock tanked. In 2003, Apple converted his options to millions of restricted stock units (ie. bona fide pieces of stock that he could sell after certain dates). See Apple's Form 4, filed to the SEC on March 21, 2003.

I did some sleuthing on this whole matter earlier today, and I found some interesting stuff in Apple's 2000-2002 annual reports along with the Schedule 14-A filed on March 21, 2002. 14-A holds the first mention that I've found of the 7.5 million option grant to Jobs; the 2002 annual report provides the actual grant date of October 19, 2001. 1.875 million of these vested on that 19th.

The 2000 annual report states that Jobs had 20,060,000 options; these were exercisable as of June 2001. Now, here's the interesting part. The 2001 report (filed December 21, 2001) claims that Jobs had 20,060,000 exercisable options as of OCTOBER 31, 2001. Those 1.875 million exercisable (of the 7.5 million total) options purportedly granted on OCTOBER 19, 2001 are NOT listed. Schedule 14-A of course fixes this by listing a total of 21,935,000 (=20,060,000 + 1,875,000) exercisable options as of January 31, 2002.

Does this look fishy to anyone? Have I screwed up in reading through the filings?

I've got a perhaps cleaner writeup at http://www.scrabbly.com/scribbles/20061228-apple-options.html that holds some links to the SEC filings at the EDGAR database. (No ads or anything on that page; just plain jane HTML, so no worries!)

 

[Keebler]

not good

i think this is the start of something bad.

my prediction: jobs will go to jail.

do i want that to happen? hell no.

BUT, completely being pessimistic here - this sounds just like the big companies brought down (enron was it?) where there were lies and deception surrounding their stock. i know this is different, but the smell is still the same stinky smell - people at the top doing their own thing for their own benefit.

unfortunately, we are at the mercy of the media and what is allowed to be disclosed so only God and a few people really knows what happened.

hopefully, a good truth will come out of this and this thread will be nothing but a waste, but the pessimitic side of me really wonders about human greed and if it got the better of the top folks at apple. i hope i'm completely wrong in my thinking.

then, you never know, maybe this is a conspiracy theory by Gates to screw over Apple

weirder things have happened

 

[lu0s3r322]

oh no, it's made the yahoo homepage, not good.

 

[Earendil]

What you described is called Off-shoring. A big trend in 2003-2005, but has since proved to be a bad decision. Although it saved many companies money (we actually discovered it was cheaper to keep our call center in Hagerstown, Pennsylvania, however our Dutch owners who are two years behind the times are still considering the move which will cost the company over $20,0000 a month more, smart huh) to move their call centers to India, ultimately it was discovered that the customer experience was not up to par. So companies have already begun to reverse the trend.

As I mentioned before would you prefer some employees to lose their jobs, only to make a company stronger or keeps things the way they are and have the company go out of business? These are the tough decisions that CEOs have to make!

As an aside, I love the two headed dragon we have here in conversation. It's called a global economy. We have an economy, some countries don't, why? Mostly because we have jobs, (and a half way decent government to back it up). People in the US don't lose their jobs *JUST* to make a company stronger. You forget that some poor family in another country has just been provided a job that they might not otherwise ever get. You feed money into their economy, and provide them with a chance to grow. yes, they get paid less than Americans do, but they also have a lower cost of living than us more often than not, or at least have their priorities in life a little more clear (who needs an SUV, really folks?).

The idea that economy is "us" vs "them", and if Large companies don't side with "us" the Americans, they are doing the world some grand evil is just assbackwards. They may do it entirely for their own pocketbook, but the net result does not equate to evil.

[/rant]

 

[charkshark]

oh no, it's made the yahoo homepage, not good.

unbelievable

I love apple, but to see them doing something like this is unnacceptable. But considering how many companies do this, can it really be counted as a crime anymore just trying to look on the upside.

 

[SiliconAddict]

You have got to be kidding ...

Let's see, you build a couple of billion dollar businesses and yet do not understand the accounting implications of backdating options. Give me a break!

Are you a CEO? Do you know what its like to run a business the size of Apple? If not then please be quiet. we have NO idea at what granular detail Jobs is involved with Apple. Yes he directs te company, and helps if not outright designs the ascetics of Apple's products. But to suggest that he keeps detailed tabs on accounting details....all I known is if I was in Jobs position I'd hire someone else to balance my checkbook. Its good to be king......er rich. *shrugs* Personally I don't care. If he, Apple, or anyone at Apple did something wrong I hope they are punished. Justice should be blind. I don't care if its Apple, Microsoft, HP, or the company I work for. Let justice be done and lets move on with life.

 

[whatever]

Seems to me that if you need to outsource our employees, your doing a lousy job at running your company.

That statement makes no sense.

Saving money, by outsourcing is the same as saving money by using machinery. What's the difference. Do you think it's wrong for manufacturers to use robotics instead of people?

Although I'm not all for outsourcing to foreign countries, I do understand that if outsourcing is a money saving measure, which will improve a companies bottom line, then it's the responsibility of management to evaluate it. Not doing so, would mean that management is "doing a lousy job of running your company."

Remember at the end of the day a resource is just that a resource. Be it human or a machine. It's up to management to decide the most cost effective way to use that resource.

I know that sounds cold, but this is simply Economics 101.

 

[Earendil]

That statement makes no sense.

Saving money, by outsourcing is the same as saving money by using machinery. What's the difference. Do you think it's wrong for manufacturers to use robotics instead of people?

Although I'm not all for outsourcing to foreign countries, I do understand that if outsourcing is a money saving measure, which will improve a companies bottom line, then it's the responsibility of management to evaluate it. Not doing so, would mean that management is "doing a lousy job of running your company."

Remember at the end of the day a resource is just that a resource. Be it human or a machine. It's up to management to decide the most cost effective way to use that resource.

I know that sounds cold, but this is simply Economics 101.

To add to that:
Companies, after all, are not in existence to provide you a job, but to provide the consumer a product. The motivation behind the supplying of that product is compensation.

~Tyler