Perhaps the Macalope spoke too soon

Brace yourself again, because Fred Anderson issued a statement today that says in part:

“Fred was told by Steve Jobs in late January 2001 that Mr. Jobs had the agreement of the Board of Directors for the Executive Team grant on Jan. 2, 2001,” Roth said in a statement.

“At the time Mr. Jobs provided Fred this assurance, Fred cautioned Mr. Jobs that the Executive Team grant would have to be priced based on the date of the actual Board agreement or there could be an accounting charge,” the statement said.

Anderson was told by Jobs that the board had given its prior approval and that the board would legally verify it, according to the statement, which added: “Fred relied on these statements by Mr. Jobs and from them concluded the grant was being properly handled.”

Anderson has paid $3.5 million to settle the difference in the options price from the strike date and the date they were approved and $150,000 as a fine.

But, wait… January 2, 2001?

Yes, January 2, 2001.

But Steve’s options for 2001 were granted in October, not January.

Oh. Really?

Yes. So these grants were not for Jobs, they were for other Apple executives.


Are you still here, Billy? The Macalope just needed you as a rhetorical device. You can go now.

OK. Thanks, Mr. Macalope.

Heh. Little scamp.

Anyway, Anderson’s statement goes on to say:

With respect to the October 2001 grant to Mr. Jobs that is also the subject of the complaint, Fred had virtually no involvement as he was not a member of the Board and did not have a formal role in compensation matters pertaining to the CEO. Fred had absolutely no knowledge of any alteration of Board documents and this is reflected by the fact that he is not even mentioned in those charges.

Well, then, that just leaves Nancy Heinen and Steve Jobs. And you will remember that Jobs’ October 2001 grant was the one with the forged board meeting. And now Anderson has indicated that he already made Jobs aware of some of the “accounting implications”.


Now the Macalope is wondering why the SEC has decided not to go after Jobs (assuming the San Jose Mercury News item was correct) unless it’s decided to let him slide on the fact that he turned those options in, which seems unlikely.

If one is looking for comfort in this news, one might take it in the SEC’s willingness to let Anderson settle.

UPDATE: Or, maybe he didn’t: SEC statement (tip o’ the antlers to swift in comments).

The Commission also announced today that it would not bring any enforcement action against Apple based in part on its swift, extensive, and extraordinary cooperation in the Commission’s investigation. 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.

Although, Apple != Jobs.

Well… at least not in the legal sense.

Another Update: Great post by Fortune’s Roger Parloff with a lot of details that the Macalope has never seen before (tip o’ the antlers to Daring Fireball).

Parloff notes that Jobs was granted new options for October of 2001 not because of the impending introduction of the iPod but simply because his existing options were under water. Still, the introduction of the iPod could be considered a significant enough event to more adequately re-associate Jobs’ compensation with the company’s performance from then on, but that’s the Macalope’s theory.

  • John Muir:

    Quick, Artie MacStrawman needs to take a bullet for the boss. Where is he in our time of possible rhetorical need?

  • swift:

    why the SEC has decided not to go after Jobs?

    This is probably the answer you’re looking for. Is it over now or what? 🙂

    “The Commission also announced today that it would not bring any enforcement action against Apple based in part on its swift, extensive, and extraordinary cooperation in the Commission’s investigation.”

  • TechnicolourSquirrel:

    The SEC is not going after Jobs because Anderson said nothing that hasn’t already been said by Apple (i.e. that Jobs knew about the backdating but didn’t know the implications). Anderson informing him that there were reporting requirements doesn’t qualify Jobs to judge whether the need for ‘prior approval’ had been met. I’m sure that there was agreement that these options would happen. Since Jobs’s opinion expressed to Anderson was not an expert one, there is no need to read into it any further than that. Anderson simply didn’t do his job — BTW we do realise, don’t we, that it was HIS job, not Steve’s, to compare what was said and done to the reporting requirements. Why would Anderson relinquish this decision to Jobs when Jobs didn’t even ask him to? So did the Board verify what Jobs said they would verify, or didn’t they? Didn’t Anderson follow through? Note that he didn’t say ‘Bury this’ — he referred Anderson to the Board. Jobs connected the necessary dots when asked … but the dots didn’t operate as they should have, now, did they? The SEC realises this. They cannot send the message that CEOs have to micromanage every accounting practice to avoid censure.

  • Doesn’t it stand to reason Fred is not telling the truth? Think it through – if Fred is telling the truth now, and didn’t reveal this info to the SEC, he is in heap big trouble for withholding evidence. The government wouldn’t settle so fast if he withheld evidence.

    Second, we have just had a very thorough investigation by both Apple and the SEC. Doesn’t it make sense as soon as the SEC had Fred in their cross-hairs he would start singing like a battalion of canaries to save his own hide? Obviously, he was silent on the subject or we would hear of SEC charges on Steve Jobs. If Fred did disclose this, we can be sure neither Apple nor the SEC thought much of it, or couldn’t come up with proof to back Fred’s story.

    Third, the other shoe may not have dropped yet and Fred singing now may be diversionary tactic to start laying the ground work for reasonable doubt should there come a criminal trial.

    In short, folks, Fred doesn’t pass the “smell” test. Fred trying to save his hide after the fact just doesn’t make sense. He would be in deeper trouble for lying to the SEC than for the options, so why come forward now?

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