Steve Jobs, the genius behind the iPod and Mac, isn't above the law. The Apple Inc. (Nasdaq:AAPL) co-founder is already facing questions about backdated options at that company. Now comes word from the Wall Street Journal that he helped negotiate a deal with noted Pixar animator John Lasseter that included a "large stock options grant with an especially well-timed date."
The exact nature of Jobs involvement isn't clear but this certainly doesn't look good. Lasseter's grant is one of several awarded by Pixar at yearly lows, which has raised questions about whether they were improperly backdated, the paper said.
If Jobs had a role in backdating options at either Apple or Pixar, he deserves to be punished. I don't think prison is in order, but the SEC may not allow him to be an officer of a publicly traded company for a period of time. For Apple shareholders, though, this doesn't have to be the end of the world.
Jobs could take on a role at Apple similar to what Martha Stewart has at Martha Stewart Living Omnimedia Inc. (NYSE:MSO). Stewart's company has been run very well by Chief Executive Susan Lyne since Stewart had her own legal problems. This has turned out to be a very good thing for shareholders because it's allowed the diva of domesticity to focus on doing what she does best. Of course, Stewart still has a huge say in the company since she is also a major stockholder.
Jobs, Disney's largest individual shareholder, didn't comment to the Journal. Disney Chief Executive Bob Iger has said that the company wasn't aware of any options issues at Pixar that would have a material impact on its earnings.
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Reader Comments (Page 1 of 1)
2-09-2007 @ 1:20PM
Tommo_UK said...
Repeat after me: backdating was not illegal...backdating was not illegal...backdating was not illegal...backdating was not illegal
Now go and find something worth writing about, that people far better informed than you haven't already pulled to pieces and shredded to bits.
Yeah, mention "apple," "steve jobs" and "options" in the same article and you're guaranteed eyeballs aren't you. Sorry, forgot... you're just whoring for hits.
2-09-2007 @ 2:31PM
garys said...
while you are right in some respects, that backdating in, and of it self is not illegal, it is a reportable item expense-wise in a companies 10q and 10k. Since this never occurred, fraud was committed by hiding an expense and misrepresenting the profitibility of the enterprise. So while you may be correct in stating its not illegal...what occured (seemingly) in these situations, would constitute fraud.
2-10-2007 @ 9:29AM
Mr. noitall said...
Well, anyone who's read any of my comments about backdater Steve already knows that I predicted a backdating issue would pop up at Pixar. Some of us don't really care about what is technically "legal"
or "illegal" anymore. Backdating is a form of fraud, maybe it's legalized fraud, but it's still fraud.
2-10-2007 @ 7:59PM
retiarius Retiarius said...
About the tagline mentioning Martha Stewart --
Ms. Stewart was an "Apple Master" once; naturally
Mr. Jobs has learned from her. Unlike Martha,
Steve was non-evasive and quite upfront
(actually volunteering to talk to prosecutors,
since there's not much that can be hidden
from the SEC given Quinn Emanual Urquhart's
comprehensive report.)
It was quite easy for Jobs to tell the truth, that
like the other 2200 CEOs in the same situation
(yes, that many, according to Prof. Lie's work), the
options favoritism was blessed by outside counsel
(Sonsini, in Apple's case), since it's been a known
grey area of the law for years.
It's quite a leap to go from ex-post-facto regs interpretation
put into practice by literally thousands of companies to
demonizing this one CEO for what is essentially a civil matter.
When one team of lawyers is in a tug-of-war with
another team over something even the SEC doesn't
quite understand, it's a stretch to think that thousands
of corporate heads are fodder for criminal, rather
than civil rules. If one wants to cripple a CEO
for getting subordinates to backdate, why not expose
the source of the ambiguous rules, the SEC itself.
2-10-2007 @ 3:19PM
retiarius said...
About the tagline mentioning Martha Stewart -- Ms. Stewart was an
"Apple Master" once; naturally, Mr. Jobs has learned from her. Unlike
Martha, Steve was non-evasive and quite upfront (actually volunteering
to talk to prosecutors, since there's not much that can be hidden from
the SEC given Quinn Emanual Urquhart's comprehensive report.)
It was quite easy for Jobs to tell the truth, that, like the other 2200 CEOs
in the same situation (yes, that many, according to Prof. Lie's work),
the options favoritism was blessed by outside counsel (Sonsini, in
Apple's case), since it's been a known grey area of the law for
years.
It's quite a leap to go from ex-post-facto regs interpretation
put into practice by literally thousands of companies
to demonizing this one CEO for what is essentially a civil matter. When
one team of lawyers is in a tug-of-war with another team over something
even the SEC doesn't quite understand, it's a stretch to think that
thousands of corporate heads are fodder for criminal, rather than civil
rules. If one wants to cripple a CEO for getting subordinates to
backdate, why not exposethe source of the ambiguous rules, the SEC
itself.