Former Apple General Counsel Settles Backdating Charges

[winmacguy]

I have to say that as a stock holder of AAPL myself I have any issues about the backdating - or the "correct" accounting for the cost of that stock to Apple. SJ is worth every penny. As long as the stock keeps on heading past the $200 (when ever it gets there) I'll be very happy.

 

[bobbleheadbob]

I don't think the issue here was "greed" per se. The problem was with the accounting for the backdating. The General Counsel and CFO have the ultimate legal and financial responsibility within the organization for ensuring that the accounting was carried out correctly once the backdated options were granted. It wasn't and they were the punished by the SEC.

It's not that they personally did anything wrong themselves, other than failing to oversee the entire process of what is required when granting backdated options.

 

[mdriftmeyer]

At the 2007 shareholder's meeting there wan't a single person who was upset with the treatment of the Steve Jobs' options back dating.

For those who do not know (Apparently most people here) SJ explained that the options were dated to the date that the Board decided to issue them to SJ. The paperwork was filed sometime later (after Apple stock went higher. But hey, back then it ONLY went HIGHER [before the SEC started poking around]) and the previous date and lower cost basis was used, the date the board decided to issue the stock options.

The real issue here (and I know it gets lost in Government investigations) is wether or not any stockholders were harmed by the companies actions. Well, lets see My IRA went up 250% since the time of the questionable stock option grant. The government investigation took out a nice chunk (ironically, the Government investigation cost me money (not the stock options grant).

Incidentally a smug reporter (er "Concerned Shareholder" asked Steve Jobs if he was going to return the difference in the profit he made as a result of the difference in the issuance of the stock options. To which Steve Jobs said "No" and there was applause from the audience full of shareholders.

The fact is that Apple pays Steve Jobs only in stock options, no salary. (Although they did also give him a jet) The board decides what and when he gets paid. As a shareholder I'm okay with that. In fact I think he might be underpaid. And if I should ever disagree with the compensation, backdated or not, I will simply sell my Apple shares.

The real question is where would the stock price be right now if the Government had drop the investigation in a more timely manner. Just how much money has the Government cost shareholders?

Al

You're correct and there are many reasons--this amongst them--how come most folks such at Finance and Accounting and the accompanying Codes.

Meanwhile, the same government who let Energy futures markets and speculators rape California out of billions and Enron employees of their life pensions not only screwed up that investigation they created this one which was a joke.

 

[matdevdug]

I have to wonder though if Apple had someone fall on their own sword to protect SJ throughout this. I mean, as the recent discussions about his health have shown, he is the figurehead of Apple and there are serious concerns about Apple after he is gone. Just a thought.

 

[Bubba Satori]

I have to wonder though if Apple had someone fall on their own sword to protect SJ throughout this. I mean, as the recent discussions about his health have shown, he is the figurehead of Apple and there are serious concerns about Apple after he is gone. Just a thought.

Yep. The royal guard surrounds the king and takes the arrows so he can make his escape. Even after their fines they're all still very rich.

 

[IJ Reilly]

The real question is where would the stock price be right now if the Government had drop the investigation in a more timely manner. Just how much money has the Government cost shareholders?

I would estimate, net -- zero. Those who panic-sold because they'd heard that the SEC was talking to Jobs about the backdating shot themselves in the foot.

 

[iMacmatician]

I have to wonder though if Apple had someone fall on their own sword to protect SJ throughout this. I mean, as the recent discussions about his health have shown, he is the figurehead of Apple and there are serious concerns about Apple after he is gone. Just a thought.

I've always been thinking of this ever since names other than "Steve Jobs" appeared.

 

[Xtoo]

You all miss the boat. Don't be naive!!!

She is OBVIOUSLY taking the fall for someone else. There's no woman executive in the business world that would take a fall like this without fighting and as you see... she is. She is getting paid under the table to clean up someone's name.

And that is the way the world of the corporate business works.

 

[matdevdug]

I mean I know it sounds kinda obvious, but at the same time it does make you wonder. SJ is pretty famous for claiming credit for inventions he didn't have anything to do with in terms of putting his name on the patent form. I just wonder how bad it would have been had this lawyer not taken the bullet.

 

[dernhelm]

It means that the options were recorded as being granted to the recipients on a date before they were actually given. Often this builds in an instant profit for the grantee. Companies can do this if they like, but they have to report the difference as an expense.

Right. Backdating wasn't the issue. Not reporting it was.

The fraud was that they backdated the stock issue and _did not report it_ as being backdated.

Remember, Apple wasn't the only company involved in this - it's a little like Steroids in Baseball. It was wrong, everyone did it, and they picked a few very big names to make examples of. Apple and Microsoft were two biggies in the tech industry, but there were several others as well.

The FCC "put this behind them" a year ago. The only people keeping it alive are the fan boys/haters of the companies they went after.

 

[IJ Reilly]

Right. Backdating wasn't the issue. Not reporting it was.

The fraud was that they backdated the stock issue and _did not report it_ as being backdated.

I think calling it "fraud" is exaggerating matters some. The impact was to not show the full value of the backdated options as an expense and therefore overstating profits. The amounts in the scheme of things were quite small. I believe these kinds of situations (of where there have been many far more egregious than Apple's violations) are more about greed and arrogance than an effort to cheat investors or anyone else. Corporate boards of directors look after themselves very well. This is never going to change, but the law does require that they accurately disclose just how well they take care of themselves, and what impact this has on the company's bottom line.

It's the SEC, incidentally.

 

[surferfromuk]

You all miss the boat. Don't be naive!!!

She is OBVIOUSLY taking the fall for someone else. There's no woman executive in the business world that would take a fall like this without fighting and as you see... she is. She is getting paid under the table to clean up someone's name.

And that is the way the world of the corporate business works.

Ridiculous nonsense.

Steve Jobs is already a billionaire and doesn't need to work for money like the rest of us. You think he's going to condone or promote petty criminal nonsense like this ?

Steve Jobs is in Apple for the love of it, certainly not money and he's not going to risk jail to get an extra few million quid when he's clearly not in a hurry to spend what he has already...

Just try reading the newspaper why don't you - everyday some low level accounts person is up on trial for embezzling. I suggest if there is criminality it was done by lower staff.