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The SEC Is Getting Closer To Jobs
Posted by
kdawson
on Tue Apr 24, 2007 04:52 PM
from the bigger-fish dept.
from the bigger-fish dept.
Strudelkugel writes "CNN is reporting that Apple's ex-CFO warned Steve Jobs about backdating options. From the article: 'Apple's former finance chief Fred Anderson blamed Apple CEO Steve Jobs for a 2001 stock option grant that was backdated, according to a statement from Anderson's lawyer released Tuesday. The statement was released by Anderson's lawyer, Jerome Roth, after Anderson settled with the Securities and Exchange Commission related to Apple's stock option plan without admitting or denying any wrongdoing.' This is serious business. It is quite possible that the SEC could someday require Jobs to resign from Apple."
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Apple without Jobs (Score:2)
The iMac clones!
The Powerbook clones!
Ring the death knell, only Steve Jobs has imagination. Oh no!
He can still run it from the shadows.
Re:Apple without Jobs (Score:5, Informative)
Yes, Fred Anderson's lawyer did claim that he had warned Job's about the issue in 2001, and implied that Job's had misled Anderson.
However, in a press release today, the SEC made several statements that flatly contradict the CNN story.
The SEC said it isn't bringing enforcement action against Apple "based in part on its swift, extensive, and extraordinary cooperation in the commission's investigation."
They also stated that, "Apple's cooperation consisted of, among other things, prompt self-reporting, an independent internal investigation, the sharing of the results of that investigation with the government, and the implementation of new controls designed to prevent the recurrence of fraudulent conduct."
In short, the SEC stance appears to be that Anderson and Apple's former general counsel Nancy Heinen had the direct responsibility to review the board's decisions in this matter and make sure that Apple complied with reporting requirements. The SEC publicly stated that they are not bringing any action against Apple, they have settled with Anderson already, and will continue prosecuting Heinen (since she has chosen to fight the charges against her.
This is poor reporting on CNNs part, not a real story.
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Re:Apple without Jobs (Score:5, Informative)
The story has more info and content than the CNN acticle.
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Re: (Score:2)
Contrary to popular belief, Steve Jobs is not, in fact, Apple. There was a period of many years when Steve Jobs was not associated at all with Apple. If they actually do go to court against Jobs (and not Apple), there may be another period of many years when he won't be associated with Apple.
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No surprise there. CNN has been on a crappy headline writing binge today. [blogspot.com]
More Likely than Resignation (Score:5, Insightful)
Re:More Likely than Resignation (Score:5, Informative)
Right. Here's the ONLY thing Steve Jobs should be saying to Federal Investigators:
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Jobs has nothing to worry about (Score:5, Funny)
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Re:More Likely than Resignation (Score:5, Interesting)
See this article [chron.com] and this other article [law.com] from back in January. Interesting that back in January, from the article, Anderson's statement is
Yet, now having claimed he knew that Jobs was awarded or considering these backdated options, he would either violated his SEC ethics obligations, or was so insanely incompetent he should have been fired anyway. So by settling with the SEC he basically admits he did act improperly. It's obvious he most likely lied (or sneakily phrased his statement) back in January.
In light of this contradiction, why should anyone trust his word now?
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Re:More Likely than Resignation (Score:5, Insightful)
2. A lawyer's prepared statement is designed to give wiggle room while implying certain things that put the client in a favorable light or make the client appear innocent. See my breakdown of the statement:
- Fred didn't play a "day to day" role
-> could mean
- Fred wasn't in charge of that, so he's not responsible for misconduct.
- Fred was in charge of that, but he wasn't involved in the details, so someone else committed misconduct and he's not responsible for it.
- Fred was in charge and is officially responsible for the misconduct, but he didn't know about it because he can't review _everything_ that happens or else he couldn't do his main job-- helping the company make money for shareholders.
-> implies
- Fred is innocent.
- Fred is above the fray.
- Fred is too important to have committed misconduct.
- Fred couldn't have known about misconduct because he doesn't know all the details.
- Whoever committed misconduct hid it from Fred.
- "in the granting, reporting, and accounting of stock options."
-> could mean
- Fred doesn't have the authority to grant stock options (true: the Board of Directors may be the only entity that can grant stock options).
- Fred isn't involved in reporting stock options to the SEC or shareholders.
- Fred isn't involved in auditing/accounting.
- Fred has authority to grant stock options but it's not one of his more significant duties.
- Fred is involved in reporting to the SEC, but since reports to the SEC don't come out on a day to day basis, the statement is true.
- Fred is involved in accounting of stock options, but since auditing and accounting isn't done on a day to day basis, the statement is true.
-> implies
- Fred is not responsible for misconduct.
- Fred is above the fray.
- Fred can manage a public company's finances in the future because he did nothing wrong here.
- Fred knows nothing.
- "he was not involved in any knowing manipulation of the process"
-> could mean
- Fred manipulated the process unknowingly.
- Fred was involved in manipulating the process but didn't know the extent of his role.
-> implies
- Fred didn't
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Re:More Likely than Resignation (Score:5, Funny)
"I'm a misfit. A rebel. A troublemaker. I admit it."
"I'm not fond of rules. And I have no respect for the status quo."
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Probably a standard, overblown scare (Score:5, Insightful)
Re:Probably a standard, overblown scare (Score:5, Insightful)
That stock price chart merely reflects that the market hates uncertainty, the announcement of anticipated news always brings an up tick, as uncertainty is removed.
The uncertainty, in this case, was on possible "smoking guns" revealed as part of Fred Anderson's settlement. There were none, his "punishment" was minimal, and as soon as the market processed this information the temporary downturn (during the period of imperfect information when traders are unsure if they have the full story) reversed and Apple's stock went higher than opening.
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And then he'll be right back (Score:5, Insightful)
Despite it all (Score:5, Interesting)
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His salary is $1 per year... I don't think anyone is going to argue he is overpaid
Re:Despite it all (Score:4, Interesting)
His salary may only be $1, but he received about $8 million worth of options last year. The $1 salary is purely symbolic now.
And for the record, Jobs is easily worth millions to the company. There's no way Apple would be where it is without him, and he is worth every penny they give him.
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Re:Despite it all (Score:5, Funny)
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Re:Despite it all (Score:5, Informative)
His current salary at Apple officially remains US$1 per year, although he has traditionally been the recipient of a number of lucrative "executive gifts" from the board, including a US$46 million jet in 1999 and just under 30 million shares of restricted stock in 2000-2002. As such, Jobs is well compensated for his efforts at Apple despite the nominal one-dollar salary. This approach reduces his personal tax liability because, under current U.S. tax law, salary income is taxed at a significantly higher rate (currently up to 35%) than the capital gains tax (currently a maximum of 15%) applied to profits arising from the sale of stock grants. Obtaining remuneration through stock instead of salary is a common extrinsic rewarding technique which ties management performance to financial benefits. Furthermore, it acts as a tax minimization strategy.
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Re:Despite it all (Score:4, Interesting)
As someone else pointed out, his salary is $1 per year, but of course he owns significant shares of Apple, Pixar, and other stocks where the real money is made.
Since Jobs never exercised the options, his only guilt in this scam is in having been awarded the options by his company (where the options backdating was approved by Anderson himself who's making the accusation now).
It's kind of like your friend giving you a forged check from a rich person's account, and then him getting busted for writing these forged checks. Since he's busted he wants to claim you as an accomplice, even though you never cashed that check.
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Re: (Score:3, Informative)
That not quite true. The options were converted to restricted Apple stock for the same value as the options were currently worth. If the options had been granted later, presumably he would have been given a lot less restricted stock than he otherwise was. The Washington Post had an article [washingtonpost.com] about it on January 11th.
So you're correct that he never exercised the options, but he gained in a big way when they were converted to a restricted stock grant of their approximate value.
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Yes, because it's much more important to have three or four random people mod you up than it is to clearly and articulately get your point across.
jobs probably won't be fired (Score:5, Informative)
"The SEC said it will not pursue any further action against Apple itself, which cooperated fully with the probe"
Gutless SEC (Score:2)
Gutless wienies.
Jobs could always... (Score:4, Funny)
Maybe ... (Score:5, Funny)
I am sure Steve Jobs broke many laws (Score:2, Insightful)
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SEC filed charges today (Score:2, Informative)
SEC Charges Former Apple General Counsel for Illegal Stock Option Backdating
http://sec.gov/news/press/2007/2007-70.htm [sec.gov]
A disturbance in the force (Score:3, Funny)
PC: "Oh, that was the door to courtroom slamming shut. There are six Mac users out in the hallway singing Jonestown's Classics..... Hey mac, is this Gatorade??"
warning: bad pun ahead (Score:3, Funny)
Would he then change his name to "Steven Pinkslips"?
More options than the iPod... (Score:2, Funny)
Apple is currently negotiating the trademark, reportedly still held by Enron.
Shareholders (Score:2)
SEC can require resignation? (Score:3, Interesting)
Steve, Why'd You Ever Hire This Guy to Start With? (Score:2)
Anderson's Full Text (Score:3, Insightful)
"Fred Anderson has a long-standing impeccable reputation and is widely regarded as one of the most ethical CFO's in the nation whose extraordinary contributions to Apple's success during his eight-year tenure are unquestioned. He is accurately recognized by many current and former Apple employees and throughout the industry as a man of exceptional ability, achievement and integrity. "With respect to today's announced settlement by the SEC of its complaint against him, Fred is pleased to put this matter behind him. "In the settlement Fred makes no admission or denial of the claims by the SEC. The terms of the settlement permit Fred to continue to act as an officer or director of public companies and do not bar him from practicing before the SEC. The claims against him also do not include fraud under the two antifraud provisions of the securities laws requiring proof of knowing misconduct. "With respect to the Executive Team grant that is the subject of the complaint against him: * Fred was told by Steve Jobs in late January 2001 that Mr. Jobs had the agreement of the Board of Directors for the Executive Team grant on January 2, 2001. At the time Mr. Jobs provided Fred this assurance, Fred cautioned Mr. Jobs that the Executive Team grant would have to be priced based on the date of the actual Board agreement or there could be an accounting charge. He further advised Mr. Jobs that the Board would have to confirm its prior approval in a legally satisfactory method. He was told by Mr. Jobs that the Board had given its prior approval and the Board would verify it. Fred relied on these statements by Mr. Jobs and from them concluded the grant was being properly handled. * Fred understood that, under Apple's stock option plan and accounting rules at the time, a grant date could be moved to a later date than the date of the actual grant decision and that there would be no compensation expense as long as the stock price on the new date was higher than the price on the original date. Apple's 1998 Executive Officer Stock Option Plan provided in Section 16 that 'The date of grant of an Option...shall be, for all purposes, the date on which the Administrator (in this case the Board) makes the determination granting such Option...or such later date as is determined by the Administrator '. Mr. Anderson understood that the date of grant was to be moved forward pursuant to this provision from January 2 to January 17 to avoid any appearance of impropriety that might arise from a grant awarded just prior to the stock price rise that resulted from the 2001 MacWorld exhibition and Mr. Job's keynote speech at the exhibition on January 9. He further understood that the January 17 date was selected by Mr. Jobs and Ms. Nancy Heinen, the former General Counsel, and that the stock price on January 17 was higher than the price on January 2. * Finally, Mr. Anderson understood that the Board of Directors, which consisted of sophisticated corporate executives of national stature, including the former Chief Financial Officer of IBM, verified the January 17 date by signing in early February 2001 a Unanimous Written Consent (UWC) with an effective date of January 17. It now appears the Board may not have given the necessary prior approval to the grants, contrary to what Mr. Anderson understood from Mr. Jobs and from the Board's signing of the UWC with an effective date of January 17. "Mr. Anderson has agreed to pay disgorgement, the difference in the value of the stock between the January 17 date and the date in early February when the UWC was signed by the Board. "With respect to the October 2001 grant to Mr. Jobs that is also the subject of the complaint, Fred had virtually no involve
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Yes, of course she did. She just did not consider it fraud.
Do you really think most wealthy people get and remain wealthy by staying well within the boundaries of both the spirit and letter of the law? No, they push the envelopes, legal and otherwise. The grass is greener wher
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Personally, I think Martha serving jail time was a bit silly...on the other hand, do you know what she was convicted of? It was not insider trading, it was multiple counts of lying to investigators and obstruction of justice. Just like Scooter libby. Just like Bill Clinton. Are we seeing a pattern here? It's a bad idea to lie to police/investigators/under oath/etc!!
In addition, you misreprese
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Rather pedantic though, everyone knows he was acquitted, and everyone knows that perjury was what brought about the whole impeachment thing...
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There was no perjury. Perjury is the act of lying or making verifiably false statements on a material matter under oath or affirmation in a court of law or in any of various sworn statements in writing. Starr's questions about Clinton's consensual relationship with Lewinsky was not material to the Paula Jones case. Not only was Clinton not convicted, he was never criminally charged.
Fun trivia about the Jones case: Judge Su
That overweight baggage fee is an outrage. (Score:2)
SEC can ban people from being Officers & Direc (Score:5, Informative)
As background: I'm a forensic accountant, do large financial investigations of public companies, and am currently doing a stock option investigation. I do not have any inside knowledge of the issues at Apple.
In fact, it isn't at all possible that the SEC could require Jobs to resign from Apple.
Not true at all. The SEC has fairly broad powers to permanently ban a person from serving as director or officer of a public registrant.
Section 10(b) of the 1934 Act. See: http://www.nysscpa.org/cpajournal/2003/0303/featur es/f031803.htm [nysscpa.org]
I'm free to take questions!
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I recall the same. However, he was named the interim CEO in 1997, and the "interim" was dropped in 2000.
Currently, Jobs is the CEO and a (non-Chairman) Director of Apple, Inc.