Apple Execs Reportedly Faked Options Documents

theodp writes "Federal prosecutors are reportedly looking closely at stock option administration documents that were apparently falsified by Apple execs to maximize the profitability of option grants. While Apple has said CEO Steve Jobs did not profit from the stock-option backdating, Jobs has reportedly hired his own attorney to deal with the SEC and Justice Department."

Lawyering up.

[GodInHell]

While Apple has said CEO Steve Jobs did not profit from the stock-option backdating, Jobs has reportedly hired his own attorney to deal with the SEC and Justice Department."

I hate it when comments like this come across as proof of wrong-doing. In buisiness I learned that you're a fool to act without the advice of a lawyer. As a law student I'm coming to understand that you're a damn fool to deal with the gov't without someone there to advise you.

The purpose of a lawyer is to look after your interests while you conduct your business - they can warn you of impending trouble - and can nip a long drawn out investigation that will result in no arrests or charges right in the budd.

It's stupid to blame someone for seeking protection from abuse.

-GiH

Not one to dogpile Apple, but...

[hypermanng]

If Jobs was aware of the problems but didn't take appropriate action it could still damage the company more than the non-story linked might imply. Essentially, Jobs has been hailed as a hero by fanboys and shareholders alike, and anything significantly tarnishing his tenure might remove some of the aura of invulnerability Apple has acquired in recent years. I don't by any means imply that Jobs' um, job is in danger, but it might complicate business partnerships and other strategic moves that Apple needs to remain competitive. iPod dominance aside, Apple's position is at least assailable, if not so tenuous as it was a decade ago. To reach its growth targets it has to navigate agreements with telecom providers like Cingular as well as convince say, Intel and Toshiba to continue to give it most-favored-nation status. Apple isn't Dell or Microsoft to expect to make demands of suppliers and partners with impunity.

Not yet, anyway, and maybe never, if the next round of initiatives (smart phone, media ventures, etc.) collapses.

Distracting Jobs and blemishing his heretofore immaculate turtleneck might have more consequences than just an easy story for everyone from CNET to AP report and re-report.

Re:Lawyering up.

[GodInHell]

Yeah yeah yeah - lawyer.. evil.. tell it to the birmingham five.. or any black kid attending school in the south.. or anyone who was arrested and found not guilty due to lack of evidence.

Oh.. right.. slashdot.. I mean *hiss* *woosh* "I have altered our arrangement" *hiss* *woosh*

-GiH

Re:Lawyering up.

[darkmeridian]

I agree one hundred percent with you -- who do you think works for the SEC and Justice Department if not lawyers? When a hundred government lawyers come after you, well, that's a great time to hire your own attorney.

Re:Shakespeare was right...

[__aaclcg7560]

You have to wonder if some laws weren't created for the express purpose of making unnecessary work that benefits the lawyers more than the public at large. The rules for stock options gets changed, an army of auditors scours the book, the lawyers are called in and the media has a field day. The public may or may not benefit from this. Auditors and lawyers are making a ton of money. Shareholders are getting soaked either way.

playing aggresively

[fermion]

I know that to win, one has to play aggressively, and there is a great benefit to controlling knowledge about internal company details, which can be quite difficult to do for a publicly traded company. That said, I do hope that all companies that lied about executive compensation get nailed to the wall, even Apple. Becoming a publicly traded company is choosing to be transparent to the public. The money that comes in with a stock offering is not free. That money cannot be arbitrarily spent as it might be in a private company. I have worked in private companies and the freedom is wonderful. I have worked in public company, and the transparency is a pain in the ass. But, again, the public money does not come for free. There is a price to be paid

The price is that executives can no longer spend company money on whatever they wish. Executives cannot arbitrarily set pay. What we have seen in the past twenty years is scam to increase executive pay while simultaneously decreasing exposure to risk, while in the truly private sector, the opposite is true. The stock option is the classic example. It is marketed as a method to align the executives interest with the stockholder interest. If the stock rises, the executive gets rewarded. In reality, just like bonuses, the behind the scene negotiations guarantees the money no matter the state of the company.

In reality, these new breeds of corporations, with their bloated bureaucracy, with no other purpose than to create meaningless work that justifies it's existence, and raise prices and cut research to free enough money to pay for these non productive agents, are indistinguishable from any other massively bloated public entity. The similarities to congress, who wants to vote in a pay raise every year, but can't complete the minimum job requirements like passing a budget, are amazing.

Re:Lawyering up.

[toQDuj]

In addition to hiring a lawyer for legal advice, Steve Jobs now can spend more time on what he should be doing, i.e. leading a company and preparing for the macworld keynote speech.

Let the lawyer figure out the law stuff, and let the CEO figure out the business strategies. Taking all matters into your own hand is a grand waste of time.

B.

Re:yay, another company who's CEO's rob shareholde

[mrbooze]

Backdating options is a legitimate accounting practice? It's never been allowed at any of the places I worked, where more than once I had options issued shortly after a huge aberrant stock spike and thus my option price was set so high that it never became profitable. I would have *loved* to have had them backdated, but had understood it was illegal to do so.

Corporate crisis PR playbook

[haggie]

Use one or more of the following: 1.) "We have launched our own internal investigation..." 2.) "We are cooperating with authorities..." 3.) Imply that the offending personnel have long since left the company... 4.) Imply that CEO was unaware of wrong-doing... 5.) Use the phrase "a few bad apples..." Apple can't use #5 (for obvious reasons), but they have used the other four. Sounds about as believable as Tony Snow discussing Iraq...

The corporate lawyer is NOT your lawyer

[nels_tomlinson]

. While Apple has said CEO Steve Jobs did not profit from the stock-option backdating, Jobs has reportedly hired his own attorney to deal with the SEC and Justice Department."

This is probably a great time to remind everyone that unless you, personally, have paid your attorney's retainer, he is not your attorney. If the lawyers paid by Apple could save Apple a nickle by hanging an innocent Steve Jobs out to dry, they would be obligated to point out that fact to their client, who is not Steve Jobs.

The moral of this is that even if your employer has paid for a lawyer, you still need your own lawyer, even if you really are as important as Steve Jobs thinks he is. Don't depend on your employer's lawyer to defend you. He'll sell you out as soon as it helps his client.

Re:yay, another company who's CEO's rob shareholde

[Aqua OS X]

Damn, that was some ridiculous fanboism. Enron was a blue chip stock, caused the biggest bankruptcy the nation had ever seen, and screwed thousands of employees and shareholders. Applauding Bush's Justice Dept for investigating is like applauding me for pooping after consuming coffee and a bran muffin. If it didn't happen, something was seriously wrong.

Moreover, it was the downfall of Enron that highlighted Arthur Andersen and eventually exposed World Com. It's not like the Justice Dept. was on some sort of corporate crime crack down. They were dealing with the blatantly obvious.

Moreover, before you start cheerleading about "all of these corrupt companies were brought to Justice," I would suggest that you look at current practices for awarding and funding contracts for security, military, and reconstruction projects.

It's a FUD-rucker

[SeaFox]

Why does Steve Jobs need an army of lawyers if he didn't do anything wrong?

Why should you object to us searching your car if you're not carrying any drugs in it?
Why should you care if we listen to your phone conversations if you're not plotting terrorism?
Why do you own a gun if you're not being attacked right now and don't plan on killing anyone?

Why are you using the psudonym "Orion Blaster" if you have the right to free speech?

Secondly, Steve Jobs hired an attorney, singular. Not "an army of lawyers". Thanks for playing the exaggeration game though.

What other documents were faked? Was the turn-a-round of Apple into a profitable company faked as well? Did Apple cook the books Enron style?

If some documents have been faked, there must be others. Just like if some music on your PC is pirated, you must have stolen all of it...

Yes, the backdating of stocks, the result of which gave MORE money to executives, caused Apple to be MORE profitable. [rolleyes]

Enron's issues were more than "cooking the books". The media portrays the entire Enron mess as a few guys changing a bunch of numbers in a ledger and a bunch of shredding of documents that proved their numbers were wrong. It goes further than that, into the realm of coercing power plant managers and tampering with the energy market itself. Remember those rolling blackout in California a few years ago? Those had nothing to do with an actual shortage of energy production ability verses demand in the summer months.

Re:Lawyering up.

[TobiasS]

It's stupid to blame someone for seeking protection from abuse.

I don't think anyone is blaming for seeking protection. You, however, using the word "abuse", seem to already have determined that he did nothing wrong.

Whether he personally profited from their accounting practices is completley irrelevant.
He is the highest ranking corporate officer at Apple and as such has responsibilities and obligations to the shareholders and the board.

If he violated those by backdating options for other executives and employees he is still on the hook eventhough he did not make a single dollar.

Re:Lawyering up.

[dan828]

It's stupid to blame someone for seeking protection from abuse.

It is worth noting, however, that Jobs did recieve backdated options during this time (55 million of them), but had them cancled in 2003 when the SEC started getting serious about investigating such things. However, he was rewarded with a bunch of new, non-backdated shares worth $85 million at the same time. Face it, Jobs stood to benefit from the backdating, was fully aware that it was going on, and still got the payoff when all was said and done. Just because they pulled a CYA so that they can now claim that Jobs didn't benefit from the options backdating doesn't give him a pass on the issue.

http://www.bloomberg.com/apps/news?pid=20601039&re fer=columnist_crystal&sid=aCjJNnxSKEnM [bloomberg.com]

Re:Corporate crisis PR playbook

[Anonymous Coward]

...except that no one died when Clinton lied. More people have died in Iraq to date than during the collapse of the twin towers.

But please, more clinton blowjob cracks; god knows they're so relevant....