Jobs Options Grant Worth $20.3mn Comes Under Scrutiny
The Washington Post broke the news this morning that the US Securities and Exchange Commission investigation into Apple Inc.’s practice of options backdating is -now focusing on why the company’s accountants waited until very late -– though still within deadline – to report CEO Steve Jobs’ receipt of 7.5 million company stock options in 2001. That particular issue, the company admitted publicly last month, was backdated.
What this means is, if Jobs had exercised those options even immediately after receiving them, he would have received some $20.3 million, according to estimates published this morning by Bloomberg. In other words, by backdating the exercise date of the options, Jobs was given the right on December 18, 2001 to purchase as much as 7.5 million Apple shares valued at $21.01 per share, at the October 19 closing price of $18.30.
According to Apple’s independent review board, which was led by former IBM CFO Jerry York and former US Vice President Al Gore, Jobs did not exercise those options. Their report admitted that a board meeting that had been purported to have approved the options grant to Jobs actually did not occur at all. So far, there is no reason to believe Jobs materially benefited from the grant, or had any reason to know how it was being accounted for.
As the Post revealed, accountants waited eight months to file papers disclosing Jobs’ receipt of those options, while for other directors for whom similar options were granted, the same accountants only waited four weeks.
But that matter was probably discussed last week during an SEC meeting with Jobs at the federal building in San Francisco, as reported this morning by the Chronicle. The existence of the meeting was only made public this morning.
Whether a federal case against Apple goes forward may hinge upon whether the US Attorney’s office in San Francisco has any more prosecutors left. The San Jose Mercury News reports that three high-ranking members have already left including two just in the past few weeks, one a lead attorney, and another who is a lead prosecutor in another backdating case, to join a law firm for whom Apple is a client. A fourth member, who leads a backdating task force, may follow.
In the meantime, the remaining investigators have yet to reveal any solid evidence that any accounting impropriety on Apple’s part led to Steve Jobs pocketing so much as one dollar. Perhaps because of that, investigators are even more curious as to why such impropriety took place at all.