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Tuesday, December 04, 2007

oPtion$ book club -- some thoughts on backdating

I'm really curious to hear from law professors about options backdating and the law and whether you think anything is still lingering around Steve Jobs and Apple. When I wrote my book proposal and outline, exactly one year ago, the "scandal" over backdating seemed to present a very real threat to Jobs and to Apple. I wrote the book not knowing where things would stand by the time I would deliver a manuscript in June. As it turns out things seem to have blown over yet I can't help wondering if the SEC or US Attorney might still be looking at Jobs. I say this only because Apple's explanation seems to make no sense at all. Their line is that they hired their own lawyers and did their own investigation and concluded that yes, things happened, but that somehow Jobs had nothing to do with it -- it was all the fault of Apple's former CFO and general counsel. To me as a lay person this seems ridiculous. But maybe to legal experts it makes sense. It really seemed to me that Apple had just thrown Fred Anderson (ex CFO) and Nancy Heinen (ex GC) under a bus in order to save Steve Jobs.

I'm no expert but my personal feeling is that the entire backdating thing is crazy rubbish and not worth the effort that has been put into it. My heart really goes out to Greg Reyes at Brocade who is facing prison time over this. It seems crazy and way out of proportion to me. But if the authorities are going to go after these people how can they just accept Apple's internal investigation and be satisfied? Could they really believe that Steve Jobs, a notorious control freak and micromanager, had nothing to do with the timing of options grants to himself and others? Anderson, the former CFO, has settled with the SEC and put out a statement saying, in effect, that Jobs was deeply involved in all this. Would the authorities hold off on Jobs simply because he's very high profile and/or because going after him would hurt the market valuation of Apple? It's been suggested to me that perhaps the prosecutors don't dare take on Jobs. Could that be so?

Posted by Daniel Lyons on December 4, 2007 at 03:51 PM in oPtion$ Book Club | Permalink

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Comments

I think the backdating case against him doesn't look good for all the optics you've identified, Daniel. And I'm no expert in the scandal, but rather than fear Al Gore's wrath, I suspect taht Northern California prosecutors wouldn't want to by trying to put Steve Jobs in jail. What would be good about that, especially given that the bad thing he allegedly did didn't seem to involve profitability? And that sort of thing - anyway, more in my post above.

Posted by: David Zaring | Dec 4, 2007 4:58:57 PM

The second brocade trial which involves an HR VP just went to the jury. She prepared the same documents that Nancy Heinen prepared, except imho she is even more of a sympathetic figure than Heinen, with mostly an administrative background. The CFO showed her how to create the documents according to the trial (so why isn't HE being indicted CRIMINALLY?). Anyway if Stephanie Jensen is found guilty- then Heinen might as well pack an orange jumpsuit. And if Heinen goes down Jobs will likely suffer also, because Jobs is as guilty as anybody else in this stupid charade.

Personally I am irritated by this whole scandal. I don't like the prosecutors tactics, I don't like the over the top guilty verdicts on no harm done, I don't like the voice this is giving the media who have been claiming every CEO is a crook for years. But what bugs me the MOST is those that scream out that this is such a huge crime, while at the same time they don't feel it is enough of a reason to sell their AAPL stock. That sucks.

Posted by: BRT1 | Dec 4, 2007 7:15:01 PM

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