Steve Jobs testifies to feeling underappreciated by Apple board

[AppleInsider]

Roughly four years after returning to Apple, Steve Jobs had set the company on course for one of the most remarkable comebacks in Silicon Valley history but says he felt underappreciated by his board of directors and as a result asked for a sizable stock grant that would later play a major role in the company's widely publicized option-backdating scandal.

Leveraging the Freedom of Information Act, Forbes magazine was able to obtain a transcript of the 119-page deposition Jobs gave to the Securities and Exchange Commission last year regarding the role of his former general counsel Nancy Heinen in matter. He was also probed in regard to his knowledge of the situation and whether he fully understood the implications of backdating stock options.

Apple was one of dozens of companies to come under investigation by the SEC after it disclosed late in December of 2006 that an internal audit had turned up irregularities in 6,428 option grants. Although Jobs was never charged with any wrongdoing, Heinen and former chief financial officer Fred Anderson were separately indicted for their roles in the backdating of two large grants given to Jobs and other members of Apple's top brass.

Both Anderson and Heinen -- who was also accused of fabricating minutes of a phantom board meeting that never took place -- resigned (1, 2) from Apple ahead of the formal charges and ultimately went on to strike deals with the SEC by which they agreed, without admitting any wrongdoing, to hefty fines and the disgorgement of proceeds received from exercising their own backdated options.

In March of 2008, representatives for the SEC interviewed Jobs for three hours at Apple's Cupertino-based campus as part of their case against Heinen. Throughout the meeting, Jobs maintained that he lacked a general understanding of Generally Accepted Accounting Principles (GAAP) and options backdating, and in many cases stated that he didn't know or could not recall the answers to the investigator's questions.

More interesting, however, was Jobs' disclosure that he alone in 2001 requested the 7.5 million share options grant, later revealed to have been backdated, because he wasn't feeling appreciated by his directors for his efforts, especially with all of his prior stock options haven fallen underwater when the dot-com bubble burst. Jobs later traded the grant for restricted stock units with less value.

"It wasn't so much about the money," he testified. "Everybody likes to be recognized by his peers. ... I felt that the board wasn't really doing the same with me. [...] I just felt like there is nobody looking out for me here, you know. ... So I wanted them to do something, and so we talked about it. ... I thought I was doing a pretty good job."

Jobs, who added that it would "have made him feel better" had the board proposed the grant on its own, said the options were approved during an August 2001 meeting when Apple shares were at $17.83 but that he continued to debate the vesting terms of the options with the board, which caused the company to miss a filing deadline. Option backdating isn't illegal as long as a company properly accounts for the move in its financial disclosures.

Both sides finally hammered out the fine points of the grant on December 18th, but by then Apple's shares had risen to $21.01. The decision was ultimately made to backdate the grant to October 19th when the share price was at $18.30, which led to the minutes of the original August board meeting being doctor and those for a non-existant October meeting crafted out of thin air.

In the deposition obtained by Forbes, Jobs denied any knowledge of the falsified meeting minutes until the scandal became public and said another grant of 4.8 million backdated options to top Apple executives -- including Anderson and Heinen -- was critical to keeping his executive branch intact.

"I was very concerned because Michael Dell, one of our chief competitors, had flown Fred Anderson, our CFO, down to Austin ... to try and recruit him," Jobs said, adding that Dell had several other Apple managers in its sights as well.

In late December of 2006, Apple announced that it would incur a total additional non-cash stock-based compensation expense of $84 million after tax, including $4 million and $7 million in fiscal years 2006 and 2005, respectively, to square itself with the federal government as a result of the backdating mess.

For his part, Anderson has maintained that Jobs played a role in the backdating of the executive team grant and that he had a better understanding of the general accounting principles than Apple led the public to believe.

[ View this article at AppleInsider.com ]

[TenoBell]

Every narcissist wants his balls stroked, it goes with the personality disorder.

[BuzDots]

This is not even news..........

But just for the hell of it.... Steve, YOU ARE THE MAN!!

You can come run my company any damn day of the week!

[Kasper]

Originally Posted by BuzDots

This is not even news..........

But just for the hell of it.... Steve, YOU ARE THE MAN!!

You can come run my company any damn day of the week!

Says yourself. There's certainly points of interest in the deposition uncovered by Forbes. Many of them never reported before.

Kasper

[DHagan4755]

I wonder if Steve reads these boards. I bet he does on occasions.

[bugsnw]

Teno: No, that comes along with the presence of the Y Chromosome.

I find the argument that companies have to reward upper management with 10s of millions of stock options a little disingenuous. It's more greed than logic. So Fred was on the verge of moving over to Dell, save for a pile of options that kept him at Apple?

The cost of this way of thinking exceeds the benefits. I'm all for getting rich and enjoying success, whatever amount that may be. I just don't like the short term focus it can create and the destructive accounting shenanigans that often follow.

When you take the risk out of gambling, you take out all the fun. Options based on meeting certain performance objectives shouldn't also reward the failure to meet those objectives.

Steve is worth whatever appropriate level of reward is deemed by his board. Apple has outperformed in a huge way. I"m talking about this general climate of rewarding mediocrity and failure.

[addabox]

Going by the reminisces of the original Mac people (can't be bothered to dredge up the link right now), Jobs was pretty cavalier about recognizing the contributions of his team. Or at the very least erratic and mercurial.

The Jobs of that era probably would have fired the Jobs that wanted stock options, and done it in an incredibly asshole-ish way.

[bloggerblog]

Hey!!! I want Steve to run my company too.

...including $4 million and $7 million in fiscal years 2006 and 2005, respectively, to square itself with the federal government as a result of the backdating mess.

Riiight, as if the gov is so organized, maybe we should bill our gov for every time they mess up too.

[teckstud]

Apple Dirt- not good.

[teckstud]

Originally Posted by TenoBell

Every narcissist wants his balls stroked, it goes with the personality disorder.

Then yours must be sandpapered to a high gloss.

[Daniel001]

Originally Posted by BuzDots

This is not even news..........

It is news, but the headline is slightly deceptive. The stock option backdating was a major affair that looked at one time as though it might land Steve Jobs in prison—this story helps explain why it didn't come to that. It is worth noting that the board never really appreciated what they had in Jobs as CEO, but that's not the most important aspect of the story.

[MissionGrey]

I wonder if he feels under appreciated now?

[SpamSandwich]

If you have a superstar running the show, you have to expect some petulance... Keep stamping your feet, Steve!

[tylerk36]

I emailed Steve and here is what I said.

Steve. Your way is the best way. The board members need to appreciate where you have taken this company. You are the good in apple. Your health is not an issue. You are not the issue. The board seems to have always been the issue. This company and its future should be the issue. Keep up the good work. Kick ass. Take names.

Steve needs more support than criticism. Screw the board if they don't appreciate him. The future is here and now! By the way Al stand up for Steve and do what is right in Steve's eyes.

[Rot'nApple]

Originally Posted by AppleInsider

"It wasn't so much about the money," he testified.

You know when somebody says, "it ain't about the money"... it's about the money! PERIOD!

I would have loved to have been in the room if the board apologized for making Steve feel under appreciated and got him a Job Well Done plaque. I bet that would have soothed over things nicely. And of course it ain't about the money but we began talks on this date when the stock was at this price and by the time we came to an agreement the stock had risen to this price. So let us go with the former. Right! Hey Steve, I meant to sell my Apple stock when the stock price was over $199.00, not when it dropped to $70 ish. Will you and Apple make up the difference?

[tylerk36]

Originally Posted by Rot'nApple

You know when somebody says, "it ain't about the money"... it's about the money! PERIOD!

I would have loved to have been in the room if the board apologized for making Steve feel under appreciated and got him a Job Well Done plaque. I bet that would have soothed over things nicely. And of course it ain't about the money but we began talks on this date when the stock was at this price and by the time we came to an agreement the stock had risen to this price. So let us go with the former. Right! Hey Steve, I meant to sell my Apple stock when the stock price was over $199.00, not when it dropped to $70 ish. Will you and Apple make up the difference?

The Plaque needs to be the size of a billboard. JOB WELL DONE.

[SpamSandwich]

Originally Posted by tylerk36

I emailed Steve and here is what I said.

Steve. Your way is the best way. The board members need to appreciate where you have taken this company. You are the good in apple. Your health is not an issue. You are not the issue. This company and its future is. Keep up the good work. Kick ass. Take names.

Steve needs more support than criticism. Screw the board if they don't appreciate him. The future is here and now! By the way Al stand up for Steve and do what is right in Steve's eyes.

Why would you e-mail him this? First of all, Jobs will view this information getting out as a violation of his privacy. Second, he hasn't been reading this article along with us, so he'll likely not even know what you were referring to.

[SpamSandwich]

Originally Posted by Rot'nApple

You know when somebody says, "it ain't about the money"... it's about the money! PERIOD!

I would have loved to have been in the room if the board apologized for making Steve feel under appreciated and got him a Job Well Done plaque. I bet that would have soothed over things nicely. And of course it ain't about the money but we began talks on this date when the stock was at this price and by the time we came to an agreement the stock had risen to this price. So let us go with the former. Right! Hey Steve, I meant to sell my Apple stock when the stock price was over $199.00, not when it dropped to $70 ish. Will you and Apple make up the difference?

Jobs is all about getting his opinion out, having people break their backs to implement his near-impossible demands.... I think we've all known someone like Teh Stevez. He's still worth it.

[anantksundaram]

This is excellent reporting. This is what financial reporting should be all about: actually based on researching a story. And, it provides a fascinating window into the persona of -- like him or hate him -- one of the greatest business personalities of all time. (Yeah, spare me....)

Congratulations to Forbes.

[talkshowonmute]

This is news buts its relevance to the general public is minimal. I think as long as a company doesnt pull an Enron they are fine in my books. Seriously I think Jobs is totaly right to want this god knows he deserves it the only reason why Apple even came back so strong is singlehandedly is doing hes a marketing genius in every way hes positioned Apple in a position of success.

[iansilv]

I physically bumped in to the guy at E3 several years back coming out of the Sony PSP both. I apologized and saw his name tag, but didn't say anything. He had two or three suits trailing him, taking notes on everything he was saying. Jeans, long sleeved shirt, casual but serious authority.

The guy just had a presence about him. Personally, I admire his management style- no bullshit- gets it done because he knows what he wants. If you work for him, you STFU until you have earned hsi respect, and if he asks rather tells you to jump, don't ask how high- begin jumping and ask if there is anythign you should change about the way you are jumping.

The only problem with that style is that you had better be right- and the guy is. Consistently. time and time again.

People with egos built on something other than their own substantial accomplishment tend to view people like this as threatening. But if they are right, if they are as good as Jobs has proven himself to be, then they are the best people to work for because they only care about your performance. Perform, and you will be rewarded.

It's just funny to listen to people speculate on how he might be an asshole. To most people, he is. But most people on his level are. And I don't think that is a bad thing.

But he had better bitch slap ATT and make sure they don't charge by the minute for video conferencing on the iphone pro but include it in the data plans...

And Snow leopard had better have system wide spell check for posts like this...

[SpamSandwich]

I guess the story also illustrates fragility of ego and personalities behind the behemoths we sometimes view as faceless corporations.

[Chris_CA]

Originally Posted by SpamSandwich

Why would you e-mail him this? First of all, Jobs will view this information getting out as a violation of his privacy. Second, he hasn't been reading this article along with us, so he'll likely not even know what you were referring to.

I was almost ready to respond exactly the same to tylerk36's post.
Hope he referenced the over one year old deposition so Steve would have some idea what he (tylerk36) is referring to.

[Kasper]

Originally Posted by Chris_CA

I was almost ready to respond exactly the same to tylerk36's post.
Hope he referenced the over one year old deposition so Steve would have some idea what he (tylerk36) is referring to.

Give him a break, he just joined the forums =P

K

[tt92618]

Originally Posted by iansilv

And Snow leopard had better have system wide spell check for posts like this...

Last time I checked, system wide spell check is already here. Seems to be checking my spelling just fine as I type this.

[addabox]

The thing about Jobs, as far as we can see from the information publicly available, is that he's the very rare type that combines pretty ruthless business instincts with the temperament of an artist.

I actually don't think it was "about the money", except insofar as money symbolizes affirmation of his vision.

It's that vision that has given Apple its unique position within the CE industry, and which drives both Apple's enthusiasts and its detractors crazy.

Arguably, given Apple's recent track record, having a monomaniacal, detail obsessed visionary at the helm is a real asset, despite the fact that it will probably lead to a lot of bruised feelings and seemingly inexplicable product decisions-- in that the alternative seems to the sort of lackluster committee work or efforts to be all things to all people that makes for Windows Mobile, for instance.

[SpamSandwich]

Originally Posted by addabox

The thing about Jobs, as far as we can see from the information publicly available, is that he's the very rare type that combines pretty ruthless business instincts with the temperament of an artist.

I actually don't think it was "about the money", except insofar as money symbolizes affirmation of his vision.

It's that vision that has given Apple its unique position within the CE industry, and which drives both Apple's enthusiasts and its detractors crazy.

Arguably, given Apple's recent track record, having a monomaniacal, detail obsessed visionary at the helm is a real asset, despite the fact that it will probably lead to a lot of bruised feelings and seemingly inexplicable product decisions-- in that the alternative seems to the sort of lackluster committee work or efforts to be all things to all people that makes for Windows Mobile, for instance.

Has anyone done a serious psychological profile of Jobs? Is there a chance that he may be obsessive-compulsive or have a mild form of Asperger's? His explosive temper and unvarnished opinions seem to indicate a self-censoring issue. What's the average multi-billion dollar corporation CEO profile?

[Abster2core]

Originally Posted by SpamSandwich

Has anyone done a serious psychological profile of Jobs? Is there a chance that he may be obsessive-compulsive or have a mild form of Asperger's? His explosive temper and unvarnished opinions seem to indicate a self-censoring issue. What's the average multi-billion dollar corporation CEO profile?

What is the average profile of somebody that would ask such idiotic questions?

[jazzguru]

Originally Posted by Abster2core

What is the average profile of somebody that would ask such idiotic questions?

I don't know. What are you like?

[Gandalf the Semi-Coherent]

For some reason, the title of this article reminds me of something I'd read in The Onion.

GTSC

[Zogg]

Jobs is another example of the kind visionary genius, like Walt Disney or George Lucas, who can be a severe pain in the backside to the people that work for them, but those 3 were able to achieve truly wonderous things because of how hard they pushed their people. You don't achieve these sorts of things by being wimpy with people. You have to be extrodinarily meticulous, hard driving and never give up on your dream.

Jobs will leave this world with a legacy that will most likely be unmatched for a long time, but will also set the standard for future generations, particularly since most companies could give a crap about qaulity these days.

Okay, I'm stepping away from the soapbox. Thanks for letting me go on a bit, just had to get that off my chest…

[iPeon]

Originally Posted by TenoBell

Every narcissist wants his balls stroked, it goes with the personality disorder.

False data is the source of all "disorders". I'm sure you are pure.

[AjitMD]

Sure Steve Jobs had good reasons to paid. Anybody who has been around may remember that he had hired the sugar water peddler Scully to help run the company in the mid 1980s. The board and Scully ganged up on Jobs and kicked in out. Then they ran the company to the ground - almost. I am sure Steve had to exit his ownership in Apple.

When he came back and saved Apple... the man is entitled to be able to buy some of his stake back at reasonable prices. After all he created value... unlike the CEOs of certain Wall Street banks or insurance companies.

I am surprised he did not take the company private as it was selling for cash value.

[2 cents]

>>>In March of 2008, representatives for the SEC interviewed Jobs for three hours at Apple's Cupertino-based campus as part of their case against Heinen.

That's a hoot. These are the same guys that could not find Madoff with a flashlight and a map. Now we know why. To busy seeking out "evildoers." Heck of a job, Brownie.

[randythot]

Originally Posted by SpamSandwich

Has anyone done a serious psychological profile of Jobs? Is there a chance that he may be obsessive-compulsive or have a mild form of Asperger's? His explosive temper and unvarnished opinions seem to indicate a self-censoring issue. What's the average multi-billion dollar corporation CEO profile?

Originally Posted by Abster2core

What is the average profile of somebody that would ask such idiotic questions?

Originally Posted by jazzguru

I don't know. What are you like?

If you have to ask! :P

[wheelhot]

screw the board, Jobs bring back the company from a near brink of death and THIS IS HOW they treat him? Losers, let see them saving a company from a brink of destruction? Hint: Made OSX open to everyone, more like a catalyst then a solution

[jmadlena]

Originally Posted by Abster2core

What is the average profile of somebody that would ask such idiotic questions?

Why are those questions idiotic? It would be interesting to see how Steve Jobs stacks up against other CEOs. In case you didn't know, studying successful people in your field is a great way to improve your skills. I wouldn't be surprised if students at business schools are studying him, along with other successful CEOs.

[rnp1]

Someone may want to Google: "Microsoft Stock options Willamette Week". (cached_
Gates entire business was expanded by backdated stock options. You don't suppose Gates told Steve about that practice as a trade for being able to steal Apples' work?
No...that is as crazy as saying torture was used to get captured middle easterners to admit they actually planned Cheneys' 911 excuse for the "War on Terror"! There are no conspiracies like that.

[DavidW]

Originally Posted by Rot'nApple

You know when somebody says, "it ain't about the money"... it's about the money! PERIOD!

I would have loved to have been in the room if the board apologized for making Steve feel under appreciated and got him a Job Well Done plaque. I bet that would have soothed over things nicely. And of course it ain't about the money but we began talks on this date when the stock was at this price and by the time we came to an agreement the stock had risen to this price. So let us go with the former. Right! Hey Steve, I meant to sell my Apple stock when the stock price was over $199.00, not when it dropped to $70 ish. Will you and Apple make up the difference?

So let me get this straight. If you walked into a car lot during a sale event and agreed to buy a car at the sale price. But by the time you filled out all financial paperwork, the sale ended and the car dealership wants you pay the non-sale price. You'ld be O.K. with that.

The board and Steve had already agreed on the amount and price of the option grant. They only disagreed on how is was to be vested. The reason why it was not granted at that price was because that agreement was reached during a meeting in Apples prior fiscal year and no paperwork was filed with the SEC pertaining to the grant during that fiscal year. If they could have used that date, those options would not have been considered back dated. As that was the actually date the board approved it. So Nancy and Fred got lazy and made up a meeting during a time when AAPL was as close to the $17.83 as possible (in the current fiscal year that started in October.). Fred and Nancy should have just reccommended to issue the grant in December and back dated them. There would have been nothing illegal about it if they had done all the proper accounting paperwork. But they also didn't want to make it appear that Apple was back dating these options for Steve Jobs. Because in reality, the price of the options was already agreed upon and approved in a prior meeting.

[macologist]

Silly me... And I thought Apple was one big happy brotherhood... Looks like infighting?! If yes, that's sad...

When Steve did this kind of Dirty Laundry in front of the investigators, I'd love to know:

if he thought that his statement wouldn't ever get out?

were his lawyers next to him, whispering in his ear before he answered each Q?

Even if he did or didn't single-handedly save Apple/AAPL - that has been a popular perception out there among the investors!

Infighting is not helpful! Hope this doesn't effect AAPL. But, now that his words came out, the some folks will be looking for any news of infighting, particularly when Steve is back!

As to his ego... It would be nice to know that it's just inaccurate 2nd hand, biased info. But, even if it is true, it's not like he mistreated any of us personally! Differences happen! I am not dwelling on that! Steve is not running for Sainthood! All we hear about him is NOT 1st HAND INFO most of the time! So, for everyone else to take sides is He Said vs. He/She Said! Either ways - SAD!

Also, if Steve is so narcissistic, how come he is so private - no Oprah, no Larry King and such!? Steve hardly does media... And it's not like media is not interested! They've been trying to interview him desperately! Seems like his MODESTY cancels out • narcissistic •!!!!

I want Apple to continue making the best products! And based on that, I want AAPL to go through the roof!

As to the Investigators, I like the previous post about Meadoff, map and flash light! So much BIG STUFF happened on Wall Street, and they were going after Apple?!

Hopefully a new way is found, so that companies don't need to use loopholes like backdating!

I can't wait to see Steve back... I want Apple to be a BIG HAPPY FAMILY I always thought were! Maybe I am a bit naïve, but that's how I see the entire Mac Community! So, Let It Be!