Steve Jobs received stock options w/o approval

[southsider2k5]

If true, this could be a HUGE problem for Apple and Steve Jobs.

 

http://www.ft.com/cms/s/801e1b82-9605-11db...00779e2340.html

 

Apple ‘falsified’ files on Jobs’ options

By Richard Waters in San Francisco

 

Published: December 28 2006 00:21 | Last updated: December 28 2006 10:15

 

Steve Jobs, chief executive of Apple Computer, was handed 7.5m stock options in 2001 without the required authorisation from the company’s board of directors, according to people familiar with the matter.

 

Records that purported to show a full board meeting had taken place to approve Mr Jobs’ remuneration, as required by Apple’s procedures, were later falsified. These are now among the pieces of evidence being weighed by the Securities and Exchange Commission as it decides whether to pursue a case against the company or any individuals over the affair, according to these people.

 

News of the irregularities, which is expected to be revealed in a regulatory filing by Apple before the end of this week, will add to pressure that has been growing on one of Silicon Valley’s most highly-regarded companies since the middle of 2005.

 

Apple is among more than 160 companies that have owned up to stock option backdating – handing options to executives and other employees at exercise prices that were set in hindsight at favourable levels – a scandal which has led to the departure of a number of chief executives.

 

The latest revelation is likely to add to questions about Apple’s disclosures about its internal investigation into the backdating issue. In October, the company largely exonerated Mr Jobs over the matter, saying that while he had been “aware” of the backdating “in a few instances”, he “did not receive or otherwise benefit from these grants and was unaware of the accounting implications”.

 

According to an Apple filing in 2002, the options under review were handed to Mr Jobs in October 2001, at an exercise price of $18.30 a share. However, the purported board authorisation was dated near the end of the year, suggesting that the benefits were both not properly authorised and were backdated. Mr Jobs later surrendered his options before they were exercised, implying that he did not gain any direct benefit from them. He was later given a grant of restricted stock by the company instead.

 

Apple’s lawyers have briefed people involved in the case on the findings of the company’s internal review of the matter, though it remains unclear how much detail will be included in the filing.

 

Under Apple’s rules, the chief executive’s remuneration must be set by a compensation committee of independent directors and later authorised by the full board.

 

An Apple spokesman refused to comment on the matter on Wednesday, but said the company had handed the findings of its internal enquiry to the SEC. The company said in October that it had found “no misconduct by any member of Apple’s current management team” but that its investigation “raised serious concerns regarding the actions of two former officers”. At the same time, it also announced the resignation from its board of Fred Andersen, a former chief financial officer. Mr Andersen had not been a director at the time of the 2001 options grant.

 

In early trade in Frankfurt, Apple‘s most heavily traded listing in Europe, the group’s shares were down 20 cents, or 0.25 per cent, at €60.13.

 

Copyright The Financial Times Limited 2006

[FlaSoxxJim]

Yeah, this doesn't look good.

 

I'll never get why people can't just be happy with being obscenely rich, instead of having to come upp with new ways to bend/break/ignore rules to make themselves grotesquely, pperversely rich.

[southsider2k5]

Yeah, this doesn't look good.

 

I'll never get why people can't just be happy with being obscenely rich, instead of having to come upp with new ways to bend/break/ignore rules to make themselves grotesquely, pperversely rich.

 

I don't know, but I would like become obscenely rich so I can find out why is sucks so bad!

[Rex Kickass]

Dumb question. Is it possible that Jobs was oblivious to this? Or is this almost always nefarious?

[southsider2k5]

I can't imagine he didn't know anything about it. He would have had to have been ignorant to it at so many different stages, especially if the part about the board not knowing is true. Why would someone just give him 7.5 million shares of stock, without board approval, and him not notice that? I think it is akin to believing the Enron guys when they said they had no idea what was going on... These guys get to the top by being relentless and knowing exactly what is going on around them. Personally I can't see a way Steve Jobs didn't know something.

[mr_genius]

Dumb question. Is it possible that Jobs was oblivious to this? Or is this almost always nefarious?

 

 

na, he must have known. he's been running a large corporation for some time now and is fairly business savy.

Edited December 29, 2006 by mr_genius

[Balta1701]

na, he must have known. he's been running a large corporation for some time now and is fairly business savy.

TIFWIW, but Apple's internal investigation says nothing bad happened. Big shocker there.

Apple Computer Inc. (AAPL) (AAPL) said its own investigation of stock-option grants found no misconduct by current management, but it did find that Chief Executive Steve Jobs was aware or recommended the selection of some favorable grant dates.

 

But Apple said Jobs did not financially benefit from the grants and the special committee that investigated the company said it has "complete confidence" in the CEO.

 

Its options mishandling will result in an additional noncash charge of $84 million, the company said Friday.

[southsider2k5]

TIFWIW, but Apple's internal investigation says nothing bad happened. Big shocker there.

 

Even the Andersen "independent" auditors never found fraud at Enron....

[southsider2k5]

TIFWIW, but Apple's internal investigation says nothing bad happened. Big shocker there.

 

Interesting to note, one Al Gore, who led the charge against Microsoft in the anti-trust case and then ended up on the Apple Board of Directors was one of a full two person committee who cleared Steve Jobs of wrong-doing in this matter.

 

http://www.dealbreaker.com/2007/01/al_gore..._the_backda.php

 

http://users2.wsj.com/lmda/do/checkLogin?m...ured_stories_hs

 

Mr. Gore, an Apple director, was a member of the special two-man committee that investigated and exonerated Steve Jobs in the backdating matter. By now, we presume he is well-versed in what backdating is and isn't. But how easily Mr. Gore -- the scourge of Big Pharma, etc. -- could have been the one braying about greed, CEO theft, the defrauding of shareholders.

 

Another link here with more of the timeline info...

 

http://louminatti.blogspot.com/2007/01/al-...-applegate.html

[bmags]

anyone read that huge story on enron in the new yorker? it was pretty interesting.

[southsider2k5]

anyone read that huge story on enron in the new yorker? it was pretty interesting.

 

I've actually bought a $2 book on Enron from barnes and noble.com that I can't wait to read. The irony is that in a post-Enron world, something like this has barely gotten notice, dispite all of the "oddities" which are surrounding it.

[bmags]

what the new yorker said, was that enron didn't hide anything, obviously i'm only a sophomore in college so feel free to correct me if any of this looks wrong to any of you, but that all of revenue for enron was coming on deals that they'd get paid for when the contract starts, 2016 and the like. And also was their heavy reliance on SPE's. Which i'm basically paraphrasing as i'm reading : for a high money loan and to bypass high interest, they set up a partnership called the SPE, the bank lends money to the partnership, and it gives it to the business. It does not show up on balance sheets and many companies do this. Enron got in trouble by not getting SPE loans with deals it was sure to recoup on, it was using them on less reliable deals, which is where it got in trouble.

 

now here was the point of the article, all of this info was reported and available, unfortunately all of this was hundreds of thousands of pages, literally, and would take an expert to figure it out over weeks. As the writer goes on to say, the judge accused enron of not releasing the info in a way we could understand, yet there were summaries of summaries of summaries and it was still 200 pages that was just as complicated to understand.

 

Now, i should clarify at this point, that he is not saying enron didn't do anything wrong, what Malcolm Gladwell, who wrote the article, is saying is that business deals are getting so complicated that we need to change the way we look at companies to prevent such a failure. As he pointed out, if we were to look at their tax returns we saw that they weren't paying any income tax, because they weren't making any money.

 

it was really fascinating, i encourage you all to try and find it.

[kapkomet]

what the new yorker said, was that enron didn't hide anything, obviously i'm only a sophomore in college so feel free to correct me if any of this looks wrong to any of you, but that all of revenue for enron was coming on deals that they'd get paid for when the contract starts, 2016 and the like. And also was their heavy reliance on SPE's. Which i'm basically paraphrasing as i'm reading : for a high money loan and to bypass high interest, they set up a partnership called the SPE, the bank lends money to the partnership, and it gives it to the business. It does not show up on balance sheets and many companies do this. Enron got in trouble by not getting SPE loans with deals it was sure to recoup on, it was using them on less reliable deals, which is where it got in trouble.

 

now here was the point of the article, all of this info was reported and available, unfortunately all of this was hundreds of thousands of pages, literally, and would take an expert to figure it out over weeks. As the writer goes on to say, the judge accused enron of not releasing the info in a way we could understand, yet there were summaries of summaries of summaries and it was still 200 pages that was just as complicated to understand.

 

Now, i should clarify at this point, that he is not saying enron didn't do anything wrong, what Malcolm Gladwell, who wrote the article, is saying is that business deals are getting so complicated that we need to change the way we look at companies to prevent such a failure. As he pointed out, if we were to look at their tax returns we saw that they weren't paying any income tax, because they weren't making any money.

 

it was really fascinating, i encourage you all to try and find it.

 

To oversimplify, Enron was kiting their financials between one company to another.

[Balta1701]

Now, i should clarify at this point, that he is not saying enron didn't do anything wrong, what Malcolm Gladwell, who wrote the article, is saying is that business deals are getting so complicated that we need to change the way we look at companies to prevent such a failure. As he pointed out, if we were to look at their tax returns we saw that they weren't paying any income tax, because they weren't making any money.

 

it was really fascinating, i encourage you all to try and find it.

Just because I think it's important to point out...Enron did a hell of a lot of things wrong in California back in 2001. They took advantage of lax regulations and lax enforcement of the laws to cause an energy crisis in California by shuttering power plants, then ran rates through the ceiling, bilking the state out of billions.

[southsider2k5]

Like I said, I have read the basics of the Enron thing at various times, but I am looking forward to this book for a little more in-depth stuff. What I do know was this wasn't nearly what that is saying. They were creating shell companies which they hid from their auditors, shareholders, and everybody else to hide their losses.

[kapkomet]

Like I said, I have read the basics of the Enron thing at various times, but I am looking forward to this book for a little more in-depth stuff. What I do know was this wasn't nearly what that is saying. They were creating shell companies which they hid from their auditors, shareholders, and everybody else to hide their losses.

Right, and they would transfer money between the companies in such a way that the timing threw off everybody. Sort of like cashing a check at one bank, to get the cash, and then walking down the street to another bank, and cashing another one to replenish the old account, and so on.

[Chisoxfn]

When it comes to Enron some of the people that got robbed the most were employees of Arthur Anderson and all the partners and principals of that company because it was a crying shame that they got closed down (and years later it came out that they should have never been forced to close, but unfortunately, it was too little too late and now we have the Big 4).

[bmags]

The point of the article was that even if you have all the transactions of the company, they are so loaded with company language and jargon that it reaches millions of pages, so we can't keep looking at it like a puzzle, but rather a mystery, so if we see something odd in a companies reports, we follow because even with all the information, it's getting to hard to decode. It was basically a suggestion on how to avoid.

[kapkomet]

When it comes to Enron some of the people that got robbed the most were employees of Arthur Anderson and all the partners and principals of that company because it was a crying shame that they got closed down (and years later it came out that they should have never been forced to close, but unfortunately, it was too little too late and now we have the Big 4).

Image is everything, my friend. Read Sarbanes Oxley if you don't believe that hype. BTW, twerp Jason, I hate auditors.

[southsider2k5]

When it comes to Enron some of the people that got robbed the most were employees of Arthur Anderson and all the partners and principals of that company because it was a crying shame that they got closed down (and years later it came out that they should have never been forced to close, but unfortunately, it was too little too late and now we have the Big 4).

 

Andersen was a victim of no one but itself. They were negligent at best in the Enron investigations, if not complicit. The two companies were in bed with each other, and AA wasn't going to do anything to piss off its biggest client. Even if they feds hadn't have cracked them, the horrible PR would have bankrupted them anyway.

[Chisoxfn]

Andersen was a victim of no one but itself. They were negligent at best in the Enron investigations, if not complicit. The two companies were in bed with each other, and AA wasn't going to do anything to piss off its biggest client. Even if they feds hadn't have cracked them, the horrible PR would have bankrupted them anyway.

The thing is, as an auditor, I understand that for a large company (which Enron was) you have a large Audit team, but still, you are not talking about even an entire AA office. You are talking about one team, albeit a large one that may have consisted of 20-40 people, plus a partner or two (and partners who do concurring reviews, the problem is, prior to Sarbanes I don't think there was much substance to concurring reviews). These actions were done 100% seperately from AA (the firm as a whole) and that group of people brought down a company (and we are talking about a handful of partners at most for a firm that has well into the thousands of partners in the US) with thousands, if not a hundred thousand employees and billions in revenues.

 

So I think people who somehow think that the whole company was in cahoots is dead wrong, thats not how the audit profession works. In a sense, you have a team which is like an individual company (representing our entire company as a whole) going in and doing our business and only members of that team review stuff (with a partner not associated with it doing a review afterwards just to verify we didn't miss something major).

 

I feel very strongly about a company and so many people effected drastically by the actions of one team (less than 1% of that companies partners and work-force). Of course I'm sure people will make a case of Enron being effected by only a few people, but in that case we are talking about pretty much the entire upper/top management of the company (in AA's case you are talking about 1% of the top management, which would be the parnters).

 

Image is everything, my friend. Read Sarbanes Oxley if you don't believe that hype. BTW, twerp Jason, I hate auditors.

We are only as good as our image. And don't get me started on Sarbanes Oxley. On one hand it guarantees a public auditors employement as long as they are semi compitent, but on the other hand the pendulem has swung completely and unrealistically too far, imo.

[kapkomet]

The thing is, as an auditor, I understand that for a large company (which Enron was) you have a large Audit team, but still, you are not talking about even an entire AA office. You are talking about one team, albeit a large one that may have consisted of 20-40 people, plus a partner or two (and partners who do concurring reviews, the problem is, prior to Sarbanes I don't think there was much substance to concurring reviews). These actions were done 100% seperately from AA (the firm as a whole) and that group of people brought down a company (and we are talking about a handful of partners at most for a firm that has well into the thousands of partners in the US) with thousands, if not a hundred thousand employees and billions in revenues.

 

So I think people who somehow think that the whole company was in cahoots is dead wrong, thats not how the audit profession works. In a sense, you have a team which is like an individual company (representing our entire company as a whole) going in and doing our business and only members of that team review stuff (with a partner not associated with it doing a review afterwards just to verify we didn't miss something major).

 

I feel very strongly about a company and so many people effected drastically by the actions of one team (less than 1% of that companies partners and work-force). Of course I'm sure people will make a case of Enron being effected by only a few people, but in that case we are talking about pretty much the entire upper/top management of the company (in AA's case you are talking about 1% of the top management, which would be the parnters).

We are only as good as our image. And don't get me started on Sarbanes Oxley. On one hand it guarantees a public auditors employement as long as they are semi compitent, but on the other hand the pendulem has swung completely and unrealistically too far, imo.

 

SarbOx is the biggest piece of crap legistlation to come out of DC in a long time. I'll just leave it there for a while.

 

AA was at fault for being stupid, not being illegal. They were cleared of any wrong doing after the fact.

[Texsox]

I feel very strongly about a company and so many people effected drastically by the actions of one team (less than 1% of that companies partners and work-force). Of course I'm sure people will make a case of Enron being effected by only a few people, but in that case we are talking about pretty much the entire upper/top management of the company (in AA's case you are talking about 1% of the top management, which would be the parnters).

 

The problem with this path is, if the company keeps their crimes and misdemeaners to a small enough group, they could avoid a larger liability.

 

As far as the Apple situation Zzzzzzzzzzzzzzzzzzzzz