updated 05:00 pm EDT, Thu April 23, 2009
Jobs on backdating scandal
The backdating scandal which threatened Apple from 2006 through to 2008 had its origins in a perceived lack of respect, claims Apple CEO Steve Jobs. Testimony from a March 2008 SEC deposition, obtained through the Freedom of Information Act, reveals that according to the executive, he approached the board of directors in 2001 about a stock option grant. "It wasn't so much about the money," Jobs comments in his statement. "Everybody likes to be recognized by his peers...I felt that the board wasn't really doing the same with me."
Elaborating, Jobs observes that his previous stock options essentially vanished with the evaporation of the dotcom bubble. "I just felt like there is nobody looking out for me here, you know," he tells the SEC. "So I wanted them to do something, and so we talked about it...I thought I was doing a pretty good job."
Jobs further adds that he had been hoping to receive recognition, such as a grant, "without me having to suggest anything or be involved in anything or negotiate anything...It would have made me feel better at the time."
Trouble may have begun with a meeting in August of 2001, when the board approved an option for 7.5 million shares. Jobs continued to argue over whether the options should be vested immediately or over a staggered schedule however, and this is allegedly what caused the company to miss filing notifications with the SEC and internal Apple auditors. Terms were finally sealed on December 18th, but backdated to October 19th, temporarily granting Jobs an extra $20 million. The options were later substituted for stock of lower value.
The SEC accuses parties of later doctoring August meeting notes to say no grant had been authorized, and then inventing a bogus October 19th meeting in which the grant actually was awarded. Jobs insists that he had no involvement in the fake documents, which mostly bore the name of former general counsel Nancy Heinen. The October 19th meeting did not even register until the scandal became public, he claims.
Quotes from the deposition additionally suggest that grants to other executives in 2001 were used to fight off job poaching. "I was very concerned because Michael Dell, one of our chief competitors, had flown Fred Anderson, our CFO, down to Austin...to try and recruit him," says Jobs. Both Anderson and Heinen were eventually sued by the SEC over backdating concerns in 2007, settling out of court.
Jobs admits to the existence of e-mail sent by Heinen on February 1st 2001, reading "Steve agreed to go with Jan. 17;" the backdating implied by the message produced $20 million for Apple executives. Options were originally going to be granted in early January, says Jobs, but it was thought that increased trading because of Macworld would make the timing suspicious. The 17th may have been chosen in backdating because it was closer to the pre-Macworld price, he surmises.