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The SEC Is Getting Closer To Jobs
Strudelkugel writes "CNN is reporting that Apple's ex-CFO warned Steve Jobs about backdating options. From the article: 'Apple's former finance chief Fred Anderson blamed Apple CEO Steve Jobs for a 2001 stock option grant that was backdated, according to a statement from Anderson's lawyer released Tuesday. The statement was released by Anderson's lawyer, Jerome Roth, after Anderson settled with the Securities and Exchange Commission related to Apple's stock option plan without admitting or denying any wrongdoing.' This is serious business. It is quite possible that the SEC could someday require Jobs to resign from Apple."
Jobs probably won't be forced to quit by the SEC. From today's WSJ coverage:
"The SEC said it will not pursue any further action against Apple itself, which cooperated fully with the probe"
Right. Here's the ONLY thing Steve Jobs should be saying to Federal Investigators:
I think a few people might...
His current salary at Apple officially remains US$1 per year, although he has traditionally been the recipient of a number of lucrative "executive gifts" from the board, including a US$46 million jet in 1999 and just under 30 million shares of restricted stock in 2000-2002. As such, Jobs is well compensated for his efforts at Apple despite the nominal one-dollar salary. This approach reduces his personal tax liability because, under current U.S. tax law, salary income is taxed at a significantly higher rate (currently up to 35%) than the capital gains tax (currently a maximum of 15%) applied to profits arising from the sale of stock grants. Obtaining remuneration through stock instead of salary is a common extrinsic rewarding technique which ties management performance to financial benefits. Furthermore, it acts as a tax minimization strategy.
https://www.eff.org/https-everywhere
CNN is not reporting the whole story.
Yes, Fred Anderson's lawyer did claim that he had warned Job's about the issue in 2001, and implied that Job's had misled Anderson.
However, in a press release today, the SEC made several statements that flatly contradict the CNN story.
The SEC said it isn't bringing enforcement action against Apple "based in part on its swift, extensive, and extraordinary cooperation in the commission's investigation."
They also stated that, "Apple's cooperation consisted of, among other things, prompt self-reporting, an independent internal investigation, the sharing of the results of that investigation with the government, and the implementation of new controls designed to prevent the recurrence of fraudulent conduct."
In short, the SEC stance appears to be that Anderson and Apple's former general counsel Nancy Heinen had the direct responsibility to review the board's decisions in this matter and make sure that Apple complied with reporting requirements. The SEC publicly stated that they are not bringing any action against Apple, they have settled with Anderson already, and will continue prosecuting Heinen (since she has chosen to fight the charges against her.
This is poor reporting on CNNs part, not a real story.
The story has more info and content than the CNN acticle.
As background: I'm a forensic accountant, do large financial investigations of public companies, and am currently doing a stock option investigation. I do not have any inside knowledge of the issues at Apple.
In fact, it isn't at all possible that the SEC could require Jobs to resign from Apple.
Not true at all. The SEC has fairly broad powers to permanently ban a person from serving as director or officer of a public registrant.
Section 10(b) of the 1934 Act. See: http://www.nysscpa.org/cpajournal/2003/0303/featur es/f031803.htm
I'm free to take questions!