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Jobs should return $85m to stockholders

updated 04:00 pm EDT, Thu October 12, 2006

Jobs should give back $85m

Apple CEO Steve Jobs should return about $85 million he earned from stock option grant to stockholders, because it was an indirect benefit of option backdating, according to one columnist. The company, which said that Jobs knew of some favorable stock grants but did not know the implications, has closed its internal investigation regarding the stock option backdating by simply implicating two former execs, despite a recent report that indicated that some of the special committee members may have conflicts and other industry reports that say Jobs may still be involved. Bloomberg's Graef Crystal believes that Apple's statement about the stock "irregularities" from Jobs--who apologized for the accounting scandal, but said he did not benefit--is a bit disingenuous and that Apple should require that Jobs give back the money he indirectly earned because of favorable stock option backdating.

"Some $85 million or so that the chief executive officer collected because of a sleight-of-hand the maker of the iPod music player and Macintosh computers engaged in when it awarded Jobs some mammoth stock option grants," Crystal said. "That's money that should go back to the shareholders." The columnist calculated the value of the "voluntarily cancelled" 55 million option shares to be $77 million--in exchange for which Jobs was offered a stock grant of about 10 million split-adjusted shares.

Earlier this year, Jobs used part of his stock grant to pay $296m in taxes, leaving him with nearly 5.5 million. Jobs "net-share settled" about 4.5 million shares on the same day that the shares vested to meet his tax obligations, but still retains a majority of shares--worth over $400 million based on a $75 per share stock price--given to him by Apple three years ago.

The stock grant-for-underwater option exchange was based on favorably chosen "backdated" dates, according to the columnist, and should be adjusted to the average instead. Jobs, he claims, was not direct benefiting from the "favorably" chosen dates, but did benefit from the stock option grant deal due to the exchange value of those options, which in all likelihood were based on backdating.

"The strike price of that grant was equal to the lowest closing price of Apple stock in the 56- and 30-calendar day periods preceding the grant and in the 30- 56- and 90-day periods following the grant," the columnist wrote. "In other words, perfectly timed to Jobs's advantage."

The columnist calculates that the company should have granted Jobs about 8.7 million shares (versus the 10 million share grant) based on the average value of the stock. The "extra" 1.3 million shares given to Jobs are worth about $85 million, according to Crystal.

"Under this scenario, Jobs's free shares would have been worth $557 million as of March 19, 2006, when the restrictions on his free shares lapsed, not $640 million. On that basis, an appropriate remedy could be for Jobs to give back to the company's shareholders that difference, or a rounded $85 million."

"Jobs may be innocent of wrongdoing. But that doesn't mean he should be the beneficiary of wrongdoing," Crystal concluded.




by MacNN Staff

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Comments

  1. bigpoppa206

    Joined: Dec 1969

    0

    Sounds like...

    someone has an axe to grind.

  1. macusersneedtogetalife

    Joined: Dec 1969

    0

    face it...

    Jobs is a corporate weasel, just like all the rest. He'd s**** his own mother for a dollar in the bank.

    Nice products = yes Nice guy = no

  1. Cec

    Joined: Dec 1969

    0

    Interesting...

    I'm sure Steve will return the difference. Not a problem!! He's not trying to F-Up his second coming of Greatness at Apple with some freakin' accounting scheme!!

  1. appleisgreat

    Joined: Dec 1969

    0

    He'll do us right.

    I think that in the end, Steve will do the right thing. What's $85 million to a Billionaire?

  1. Swift

    Joined: Dec 1969

    0

    Coupon clippers, unite!

    Is somebody saying that Jobs made Apple stock decline with the rest of the tech boom? On the contrary, he's been the driving force behind Apple's recovery from near death. The options he was granted were not cashed in. So they cancelled that after Sarbanes-Oxley made it illegal, and gave him about what they would have given him in cash. And Apple and its shareholders got a bargain.

  1. Albert

    Joined: Dec 1969

    0

    what are the real

    facts here anyway???

    In this day and age who really knows the truth??

    Bloomberg's Graef Crystal should at least present the facts before laying out judgement.

    Since i doubt that any significant public outcry exists anyway, Bloomberg's Graef Crystal is taking this opportunity to attack Apple because he is a biased pseudo-journalist and works for a right wing propagandist

  1. MACchine

    Joined: Dec 1969

    0

    กกก WoooW !!! Slimyballl

    That is surprising !

    All that wrangling and "Oh poor innocent ME !" and half a BILLION !!!

    AND SOME PEOPLE THINK THAT IS ABOUT POLITICS !?!?!?

    VEEEERY Slimey ...

    And maybe it looked smart last week ...

    ... but next week it could look REAL DUMB !!!

  1. Armas

    Joined: Dec 1969

    0

    Huh?

    The options grant was cancelled, so that's the end of that. After steve voluntarily cancelled the options, the board elected to give steve 10 million shares. These new options didn't have a strike price, just stock.... and they withheld 47.5% in taxes. As to what crazy amount arbitrarily to decide to b**** about, I think Forbes is a rag, and they'd publish a story of any of us s******* our grandmother to improve their ratings... but Forbes is a rag...

    Maybe Apple shareholders LIKE steve, and would keep him even @ 1 Billion in cash.... it's still way better off than the bankrupt lost company before steve... that is why no one complained about ANY of the options at shareholders meetings.... Who else can run Apple???

  1. Terrin

    Joined: Dec 1969

    0

    Right

    Give me a break. Jobs is Apple. The company would not even be around today wihtout Jobs. Let the guy keep every penny. The guy does not take more then a dollar yearly in salary. He did not ask for the stock options grants. He did not get paid for two years while first coming back to Apple.

    Let the others hang, but Jobs should get a collect $200 dollars and get out of jail free card.

    Moreover, I own Apple stock. Like I want Jobs to get sick of being there and leave while I am holding the stock.

    Finally, people benefit all the time unknowingly from the wrong doing of others.

  1. cebritt

    Joined: Dec 1969

    0

    Huh!?!

    "The columnist calculates that the company should have granted Jobs about 8.7 million shares (versus the 10 million share grant) based on the average value of the stock."

    Apple's Board can give Steve any amount they choose. They're not required to match the original 55 million cancelled options. There's no sleight-of-hand.

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