Jobs not seen as suspect in Apple options scandal - analyst
Even if Apple Computer is found guilty of improperly backdating stock option grants, chief executive Steve Jobs is likely to remain clear of any liability, one Wall Street analyst says.
On Thursday, Apple provided an update on its internal probe into the options scandal, saying its likely the company may need to restate its historical financial results to reflect non-cash charges for stock options compensation.Â*
"While Apple hasn't been formally charged by the SEC or even received an informal inquiry, we do not find this update surprising and anticipate a minor impact to GAAP financials, " American Technology Research analyst Shaw Wu told clients on Friday.
Based on his own analysis, Wu said stock compensation at Apple is not a large component relative to its earnings and compared to most other technology companies.Â*"For example, over the last seven quarters, stock options compensation is typically $0.03 to $0.06 vs. its quarterly earnings of $0.34 to $0.65," the analyst said.
But more importantly, Wu said, it's his continued belief that even in the worst case scenario where Apple is found guilty of improper options granting, chief executive Steve Jobs will not be found liable. "The reason being the compensation committee at Apple is run by an independent board that is not comprised of employees of Apple," he said.
Apple has acknowledged that one of the problematic grants was issued to Jobs, but said it was subsequently cancelled and resulted in no financial gain to the CEO.
If Jobs were to be found liable of fraud in the backdating of option grants, he could be forced to step down from the company.
On Thursday, Apple provided an update on its internal probe into the options scandal, saying its likely the company may need to restate its historical financial results to reflect non-cash charges for stock options compensation.Â*
"While Apple hasn't been formally charged by the SEC or even received an informal inquiry, we do not find this update surprising and anticipate a minor impact to GAAP financials, " American Technology Research analyst Shaw Wu told clients on Friday.
Based on his own analysis, Wu said stock compensation at Apple is not a large component relative to its earnings and compared to most other technology companies.Â*"For example, over the last seven quarters, stock options compensation is typically $0.03 to $0.06 vs. its quarterly earnings of $0.34 to $0.65," the analyst said.
But more importantly, Wu said, it's his continued belief that even in the worst case scenario where Apple is found guilty of improper options granting, chief executive Steve Jobs will not be found liable. "The reason being the compensation committee at Apple is run by an independent board that is not comprised of employees of Apple," he said.
Apple has acknowledged that one of the problematic grants was issued to Jobs, but said it was subsequently cancelled and resulted in no financial gain to the CEO.
If Jobs were to be found liable of fraud in the backdating of option grants, he could be forced to step down from the company.
Comments
Stock price please fall so my buddies can pick it up cheap. Then we will sell after the great announcements at WWDC.
- Jasen.
His salary is 99 cents. It would be pretty hard to convince a jurry that Jobs did fraud for the money.
Its not about the salary, as salary isn't based on performance. Bonuses, and options, and all that fun stuff (like those shares of stock he received when he returned all those options that might have been back-dated) are based, usually, on company performance. As such, if restating earnings means lesser performance, there might be a call for a refund on those bonuses.
BTW, everyone should remember that while Jobs returned those stock options, he was compensated with a batch of actual stock, which, while technically might not have been an exchange, was basically just that. If the value of his options was supposed to be less then it was, then the exchange cost apple more money then it should. (No one would give up millions of dollars of stock options just because it felt like a thing to do).
There's still the possibility of lawsuits, esp. on the civil side, because of this.
Ticks me off every time I get one of those.
If so, Steve Jobs won't be getting nailed in that. The shareholders damn well know that if Steve Jobs gets the boot, the stocks will fall like mad and Apple will be doomed.
i'm not worried about that at all.
but apple needs to hurry up and fix this crap, i dont like this kind of light being shined on the company
Its not about the salary, as salary isn't based on performance. Bonuses, and options, and all that fun stuff (like those shares of stock he received when he returned all those options that might have been back-dated) are based, usually, on company performance. As such, if restating earnings means lesser performance, there might be a call for a refund on those bonuses.
BTW, everyone should remember that while Jobs returned those stock options, he was compensated with a batch of actual stock, which, while technically might not have been an exchange, was basically just that. If the value of his options was supposed to be less then it was, then the exchange cost apple more money then it should. (No one would give up millions of dollars of stock options just because it felt like a thing to do).
There's still the possibility of lawsuits, esp. on the civil side, because of this.
He returned the split 2:1 on 10 Million shares plus the 7.5 Million shares granted to him. The committee later granted to him 5 Million restricted shares.
Hate to break the bank but the 10 Million -> 20 Million were valued at $120 Million (after the 2 for 1 split the stock was priced at $60). His restricted 5 Million in no way outvalues these returned shares let alone the additional 7.5 Million shares.
What he really means:
Stock price please fall so my buddies can pick it up cheap. Then we will sell after the great announcements at WWDC. - Jasen.
Quoted for Truth.