Claims Of Backdating Follow Steve Jobs Around

from the wherever-he-goes dept

Fri, Feb 9th 2007 12:38pm — Joseph Weisenthal

Steve Jobs has been in the news a lot lately for his stance on DRM, and before that for unveiling the much-anticipated iPhone. Today he's in the news again for a story he'd rather just go away. Sources known to the Wall Street Journal are saying that in 2001, Jobs was involved in negotiations at Pixar to furnish Toy Story director John Lasseter with a stock options grant dated three months before the deal was signed. And it just so happened that the date they selected was a recent low for the stock. This isn't the first time that rumors of Jobs' involvement in stock options backdating at Pixar have surfaced, and of course he continues to be dogged by claims that the same thing happened at Apple. So while other executive have lost their jobs, Jobs has done a good job of casting himself as not having been closely involved with the practice. Now that more is coming to light about his actions, at both of his places of employment, it's going to be harder for him to make this claim.

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12 Comments

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Bumbling old fool, 9 Feb 2007 @ 12:57pm

Man...
I wish I had his teflon...
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a, 9 Feb 2007 @ 1:30pm

He is kind of running out of things to bump this story out of the headlines. He has done the phone and the DRM of labels.

Wonder if he will come out with a big net neutrality paper soon?
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JWW, 9 Feb 2007 @ 2:09pm

Bad for stockholders
Whats ironic in all of this is that the pursuit of these claims ostensibly to protect shareholders, but if Steve ever gets charged in this the shareholders are going to lose massive amounts of money. It would be the worst thing they could possibly do for shareholders.
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DMM, 9 Feb 2007 @ 2:15pm

The final line of defense
isn't whether or not Steve actually knew about or was closely involved with the backdating, but rather whether or not he understood the accounting implications and was involved in not making a proper accounting for the backdated options.
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Scott Salbo, 9 Feb 2007 @ 2:50pm

Backdating
Actually, there is nothing illegal in the backdating of stock options. Not a single thing, though it is often assumed to be unscrupulous. But this assumes that the activity is in some way harmful to the interests of the corporation and its shareholders. Apple is Steve Jobs, and Steve Jobs is Apple. No corporate investor interested in Apples future cares about this story, and is only kept alive by the media pundits who want the public to believe a law was broken, where no prohibition actually exists.
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William, 9 Feb 2007 @ 3:44pm

They suck
They should do away with stock options all together. And make companies pay all compensation with cash. Stock options only dilute share prices and hurt the share holders without effecting the company bottom line and they are the reason for the soaring compensation packages that CEO's get. A cash economy would promote fiscal responsibility and stop all of this corruption. And as a share holder it pisses me off every time a company basically gives away stock for a dollar to some executive and he turns around and sells them for fifty dollars.
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An ony mouse, 9 Feb 2007 @ 4:30pm

Jealousy
The story has legs because Jobs is on top. There are a lot of people who want to see him tumble because schadenfreude is the only happiness they have in their lives.
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andy, 9 Feb 2007 @ 5:11pm

Re: They suck
"hurt the share holders without effecting the company bottom line and they are the reason for the soaring compensation packages that CEO's get."

you're half right... stock options DO affect the bottom line as of last year and the passage of FAS 123, which requires the expensing of stock options. but they still are the reason why ceos cash out big.

also, backdating options isn't illegal, the dispute would be over whether or not the options were properly accounted for. usually, options are priced at the current day's market price, giving them an intrinsic value of $0 and, therefore, $0 is recorded as an expense. if they're backdated, to, say, a price of $3 when the price today is $20, each share of backdated stock should be expensed the intrinsic value of $17 because that's how much money the company lost in backdating the options. If you gave it to them at $3 when it was worth $20 and recorded $0 as expense, that's what gets you in trouble.
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The Cell Geek, 11 Feb 2007 @ 8:15am

Silly Jobs... your not supposed to get caught
Does this make Steve Jobs the Joe Smith of Silicon Valley? I hope this costs The Timberwolves more draft picks...
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a, 11 Feb 2007 @ 7:56pm

I think some of the posters here must work for Apple or their PR Firm.

I have read that "there is nothing illegal about stock option backdating" many times on different websites and blogs. Thats pretty funny.

I agree, there is nothing wrong with backdating the stock option. There is something very wrong with not accounting for it in your financial statements though.

Put it this way, Steve Jobs lied about how well the company was doing when he talked to investors about Apple. Its that simple.
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John, 12 Feb 2007 @ 12:37pm

Re: They suck
Stock options actually align the goals of employee wit the goals of investors. Everyone wants to drive the stock price up. While backdating eliminates some (if not all) of this incentive, stock options are a good thing for investors. If you give me, an employee, the option to buy stock in the future at today's price (not the best price last year), I am going to work it do what I can to improve the stock price to get the most money. As long as options continue, it is in my imterest to keep things above board to avoid worthlesss options.
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theMorons, 12 Feb 2007 @ 4:20pm

there's nothing illegal?
you iFanboys need to live in reality. there IS something illegal about backdating and not reporting it. If you show a profit on your earnings report beacuse you didn't expense the backdating than it is cooking the books. Don't let the koolaid make you stupid.
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