Jobs, other Apple execs settle shareholder backdating lawsuits for $14M
By Nilay Patel 
posted Sep 11th 2008 11:41AM
posted Sep 11th 2008 11:41AM
It looks like the Apple options backdating mess is finally drawing to a complete close, as the last of the shareholder derivative suits against Steve Jobs and other Apple execs will reportedly settle for $14M pending the court's final approval on October 31. Apple has also agreed to reform parts of its options plan, but in the end all of this has basically come out to nothing -- particularly since shareholders in a derivative suit sue on behalf of the company, meaning the $14M is being paid by Steve and the other execs' insurance companies back to Apple, which doesn't really need it. Oh well, at least we briefly got FSJ out of it, right?[Via AppleInsider]
They got off easy. Thieves.
Options are given to executives and other employees, usually managers and up, as part of their compensation. Backdating options was common practice. My company did it, lots of companies did it.
Backdating options is not wrong. the only thing that Apple did wrong, was to not disclose the backdating.
The backdating of the options had, in reality, zero impact on the value of the stock to the shareholders.
If I'm not mistaken Jobs and some of the other execs didn't even exercise the options.
Nothing was stolen, and as an Apple shareholder, the only thing that irritates me is that such a big deal was made about it that it impacted the value of the stock, but it has long since recovered from that.
And to cut off any fanboy arguments, I's say exactly the same thing if Microsoft did this. Much ado about nothing.
as a hypothetical, say the back dated option strike price was $10 and you exercised a while later when the stock was $20, for a $10 profit. If the option wasn't back dated, say the strike price would've been $12, same exercise price, for a profit of $8. Where do you think the $2 difference comes from? Thin air? While the practice is common, as you mentioned, the non-disclosure of it is what's wrong. Effectively, stealing money from shareholders.
obviously not thin air. My understating, correct me if I'm wrong, that the maturity (vesting) date of the options is tied to the backdated date. Therefore, though your example it correct, it doesn't matter _that_ much. It's just as it the options were issued on the earlier date.
back dated options are technically granted on the same date as options that would not have been back dated. the entire purpose for back dating in this context is specifically to pick a date where the stock price was at or near its lowest during a given amount of time, usually up to several months prior to the grant date. all else equal, a lower current stock price makes your options worth more.
Ugh - I never liked options for company execs as a major part of their compensation package. You know what happens when the company execs focus on the stock price and not the company? You get Enron all over again - pumping the earnings and schmoozing the analysts to get favorable ratings and that market price to a point well above the strike price (whether backdated or not). I'm not saying Apple is in that category, but it only takes a few idiots at the top to begin the slippery slide of corporate fraud. Plus, with compensation like this being this complicated, companies have to hire people just to look after it - WTF, that doesn't create value, I'd rather have the company spend the money on people making and selling things (and therefore driving profit), not to work out the complications of stock options.
As an ex-company auditor, I knew I was in for a bad day when I go to a new client and see their current stock price displayed all over the place. It just screams a company more interested in the stock price than its operational strength in the market.
Huh. Interesting, yet unimportant. Next!
More likely the other way around... Corporate fraud is an important topic, just not a page-turner for us gadget nuts.
Of course an Apple fanboy would want us to move on to the next topic rather than discuss something that makes thy savior Apple Co. look bad.
From what I've seen, who? is not an Apple fanboy, so I don't understand your accusations...
His accusations are based on the old Engadget troll mantra:
1. If you say anything good about Apple or SJ, you are a fanboy.
In the end, just an idiot who has nothing else to say, but wants to participate somehow.
Well, I didn't see how it effects us in any way... That's all.
If someone mods something, makes something, or a company dies/merges, it could effect the average gadget nuts. Other than that? Not much matters.
Wait, you refused to put up any stories about Google Chrome because it didn't exactly fall under technology, then you put this story up?
Don't act like you don't know why. Sad, I know...
The next Safari article will be yours ...
People need to stop complaining about this. It was well covered by Weblogs, Inc.. Downloadsquad focus half of their articles on Google, TUAW talked about it quite a bit (considering it was Webkit based like Safari is and the OS X platform was left out from the big release). Switched, Engadget's child-site, also covered it.
So people go ahead and complain about Engadget (a site about GADGETS. It's in the name people.) doesn't cover something software related that two sister sites and a child site are covering extensively and instead focus more on LHC, new iPods and Zunes, Sprint/Sony phones, etc. when they are gadgets. The only software I notice Engadget covering extensively is Vista/XP/Leopard releases and updates along with (at the time when it is released) suites like Office and maybe a mention of CS4 here and there.
Get over it. This is a gadget blog, not a software blog.
@ Josh
Are you part of the new Engadget staff? Care to point out to us what this story has to do with gadgets?
@ Josh
I agree, but I'd at least like some solidarity, as what does this story have to do with gadgets?
I have to agree with you. How is this a gadget?
Also I am not a huge google fan, but I still felt Chrome should have been covered. I have to argue against engadget because I believe Chrome will affect many of our gadgets so therefore it is relevant.
It obviously doesn't matter enough to you to "shop" elsewhere for information. By still viewing these articles you in turn bump up Engadget's advertising profits thereby creating the opposite effect of what you intended. Posting a complaint on still registers as a hit to the site. Just saying....
Ha, was going to comment the exact same thing...
Vista was worst gadget of the year 2007, so software is a gadget if it looks bad for MS.
How come if you steal someones wallet for a couple of hundred dollars that's a felony and you go to jail. Of COURSE you have to return the entire loot.
Whereas for large scale criminals it seems that lately all you need to do is steal/embezzle a substantial sum, then pay back a fraction of the loot and keep the rest. Surely Jobs made more than 14m$ with this. I can't believe how fucked up our corporate system still is, I can't claim it became that way, it always was but why isn't it changing?
I hate Steve Jobs and if only for the ridiculous shirts.
FSJ is a lousy journalist. The recent nonsense as his big debut at Newsweek is proof enough.
Jobs is just another corporate pig like all the others.
Steve Jobs did not exercise any of the options in question, so your assertion thqat he made money is not correct. The corporate systyem has its problem, but this is not one of them.
i love how people like to portray apple as the little guy fighting the little guy, when in truth, steve jobs is infinitely more arrogant and greedy than someone like, say, bill gates.
Jobs is a scum, it's a well-known fact.
Sinai: Yes, you hate Apple and Jobs for no reason. We get it.
G.I.: You may want to look up the word "fact" in the dictionary. I'm pretty sure it means something other than what you think it means.
Relax...Jobs has been well known for being arrogant.
And they say MS is Evil. While Jobs is stealing money at least Bill Gates is giving it away!
this gets coverage but not google chrome?
Sorry, FSJ Dan is now an official Ass Hat. FSJ no longer lives, and who knew that hat really lurked beneath.
Pitty, I used to really like him.
if this was microsoft people would be all over it. apple is worse than ms about every lawsuit that microsoft has gotten sued for.
luckily steve jobs doesnt have much time left to get sued much longer. fail.