On 2nd, January I wrote in respect of the Apple back dating options scandal:
Jobsâ€™ excuse is that he didnâ€™t benefit personally. Well who did and to what extent? If there is any whiff of favouritism anywhere then Jobs must surely be up for an SEC spanking.
At the time, I had in mind that certain employees or family members might have been given the opportunity to get their snouts in the trough. What I didn’t expect is the current report that it is fact Jobs who benefits but in a round about manner. Silicon Valley Watcher says:
According to Apple filings with the SEC, Jobs exchanged his options for $75 million worth of restricted Apple stock – 5 million shares – just about the value of the options he gave up
Even so, things are not as clear cut as you might imagine. According to the Washington Post:
Backdating stock options is not illegal. But not disclosing the practice to investors or falsifying documents to cover it up may be.
How crazy is that? I don’t see this thing going away any time soon. While Jobs may be an industry icon, he’s not Superman even if showing all the signs of being Teflon coated. If Jobs gets a free pass by the SEC then it sends a clear signal to every other company. If you can get away with it, fine. What kind of standard is that setting? Even now I don’t believe what I’m reading. In one WP passage:
Though Apple said Jobs may have recommended the selection of some favorable dates for options, it said he did not appreciate the accounting significance of choosing false dates
Yet in another:
Apple reported in its filings that Jobs voluntarily gave up his stock options in March 2003 and “in exchange for his cancelled options” received the 5 million shares of restricted stock. The filing said Jobs relinquished the options partly because he was concerned that the number of unexercised options at the company had grown too large for its financial health.
Do those two statements gel? Never in a million years. I’ve seen back dating in action on tax returns, contracts and share certificates. Experience tells me that those who engage in this practice know exactly what they’re doing. Any pretense to the contrary is a lie and a fraud on the shareholders.
I don’t know what’s going on in Jobs head but it can’t be healthy. Look no further than Paul Kedrosky’s analysis of Apple’s cavalier attitude towards Ciscos’ pre-existing trademark filings. Jobs and Apple must be insane if they think Cisco will take this lying down or that they can beat them in court. It will be settled but that misses the point that at the very top of Apple – which means Jobs – there is ‘screw’em all’ attitude.
I don’t care how great Jobs has been for Apple. Heck – I’m a Mac fanboy fer chrissakes. He’s gotta go before the customer handling reps from Club Fed come to pick him up for an unscheduled vacation.
UPDATE: Hugh’s cartoon is a perfect accompaniment