Steve Jobs missed out on $10 billion from stock options adjustment

Posted:
in AAPL Investors edited January 2014
Had Apple co-founder Steve Jobs not cancelled his stock options in exchange for $75 million in shares in 2003, he would have an extra $10.3 billion in profits today.



The revelation comes courtesy of a new column Tuesday from Brett Arends of MarketWatch. He noted that the tech bubble burst in 2000 had left many companies hurting, including Apple, which dropped from a peak of $36 down to $7.



In 2003, stock options granted to employees "seemed completely worthless," he wrote. "After all, Apple stock would have to climb all the way back up to those giddy heights before the options even started to show a profit again."



Apple employees were allowed to exchange their options for a smaller number that became valuable at a lower price. Jobs canceled his options in return for $75 million in shares, a move that was said to allow the company to offer more options to other staff, and reportedly was not done due to the diminished stock price.



"Jobs held 15 million options at an exercise price of $9.15, which meant they started to gain value only if Apple stock exceeded that price, and 40 million options at an exercise price of $21.80," Arends wrote. "Apple at the time was little more than $7 a share. (These prices have been adjusted to reflect the subsequent stock split.) Total value: $12.8 billion."



"In other words," he continued, "Steve Jobs missed out on $10.3 billion in extra profits."



Of course, Jobs' 10 million shares are still worth about $2.5 billion today. And last year, he was named the No. 43 wealthiest American with a net worth of $5.1 billion by Forbes.



The chief executive famously takes a salary of only $1 for his work at Apple, but receives millions in compensation in the form of stock options.



While Arends suggested Jobs' move in 2003 was the "dumbest trade ever," Jobs has also been behind some quite profitable deals. Perhaps his best move was purchasing Pixar from filmmaker George Lucas in 1986 for $10 million. He sold the company to Disney in 2006 for $7.4 billion in stock, and was also given a seat on the Disney Board of Directors.
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Comments

  • Reply 1 of 75
    msanttimsantti Posts: 1,377member
  • Reply 2 of 75
    ilovestuffilovestuff Posts: 143member
    Maybe just being alive is good enough!
  • Reply 3 of 75
    edubedub Posts: 37member
    sucks to be steve
  • Reply 4 of 75
    bageljoeybageljoey Posts: 1,929member
    So he has 10million shares worth $2.5 billion.

    And he sold Pixar at a profit of over $7 billion.

    Yet his net worth is only $5.1 billion?



    Wow, those must have been some expensive lawyers getting him his demolition permits...



    ...of course there could be other expenses:

    Portable RDF generators for presentations...

    An English major to write his legnthy email correspondences...

    A super secret black turtleneck factory in China...
  • Reply 5 of 75
    Anything over a billion is just showing off.
  • Reply 6 of 75
    Jobs holdings in aapl are:" 5.426 million shares of Apple (most of it from a 2003 grant of 10 million shares, later reduced to pay taxes)"



    http://tech.fortune.cnn.com/2009/10/...illion-richer/
  • Reply 7 of 75
    anantksundaramanantksundaram Posts: 20,185member
    Quote:
    Originally Posted by Bageljoey View Post


    So he has 10million shares worth $2.5 billion.

    And he sold Pixar at a profit of over $7 billion.

    Yet his net worth is only $5.1 billion?



    Wow, those must have been some expensive lawyers getting him his demolition permits...



    Maybe it's after adjusting for tax liability.....?
  • Reply 8 of 75
    zindakozindako Posts: 468member
    Quote:
    Originally Posted by Bageljoey View Post


    So he has 10million shares worth $2.5 billion.

    And he sold Pixar at a profit of over $7 billion.

    Yet his net worth is only $5.1 billion?



    Wow, those must have been some expensive lawyers getting him his demolition permits...



    I think he sold Pixar to Disney for over 7 billion in Disney stocks, not actual USD.
  • Reply 9 of 75
    stevetimstevetim Posts: 482member
    A few billion here, a few billion there ... pretty soon your talking about real money here.
  • Reply 10 of 75
    cvaldes1831cvaldes1831 Posts: 1,832member
    Quote:
    Originally Posted by Bageljoey View Post


    So he has 10million shares worth $2.5 billion.

    And he sold Pixar at a profit of over $7 billion.

    Yet his net worth is only $5.1 billion?



    That was his valuation last year by Forbes.



    Note that DIS dropped below $16 per share during 2009; it's trading about $33 today. He's probably worth about $8-9 billion right now.
  • Reply 11 of 75
    esummersesummers Posts: 953member
    Quote:
    Originally Posted by Bandman999 View Post


    Anything over a billion is just showing off.



    Yes, a billion is enough for the data center that will house his soul when he ascends to a being of pure energy. Maybe another billion for an aluminum cube that is placed at the center of the RDF. All the content publishers will be placed inside of it. Then a movie will be made about it called Cube 3. (Just feeling goofy today)
  • Reply 12 of 75
    ilogicilogic Posts: 298member
    the real bottom line hasn't changed a thing...
  • Reply 13 of 75
    But his decision freed up a bunch of stock options for other employees...so maybe his motives were not purely based on making money...imagine that.
  • Reply 14 of 75
    markbmarkb Posts: 153member
    This just in....I missed out on 33 Million last Friday because I picked the wrong lottery numbers. Man if only that damn crystal ball would stop screwing me and Steve over.



    Come on. No one, not even Steve, knew they were going to do as well as they have. Now maybe you can argue he should have kept 10% of those options (if you can even split them up like that) but no one walks away from a sure $75 Million.
  • Reply 15 of 75
    esummersesummers Posts: 953member
    Quote:
    Originally Posted by fishstick_kitty View Post


    But his decision freed up a bunch of stock options for other employees...so maybe his motives were not purely based on making money...imagine that.



    There is such a thing as enough... He was probably at it back in 2003. There is probably 10 billion divided between Apple employees now instead. There are a lot of guys at Apple that don't need to work another day in their life, yet they stick around.
  • Reply 16 of 75
    sflocalsflocal Posts: 5,653member
    Quote:
    Originally Posted by AppleInsider View Post


    Had Apple co-founder Steve Jobs not cancelled his stock options in exchange for $75 million in shares in 2003, he would have an extra $10.3 billion in profits today.



    While Arends suggested Jobs' move in 2003 was the "dumbest trade ever,"...



    It's easy to be an armchair critic. So am I to understand that the author realized how dumb a move it was and invested his entire 401K into AAPL at that time?? I'll bet money he was just as "dumb".



    Considering the billions he is already worth, who the heck cares?
  • Reply 17 of 75
    tundraboytundraboy Posts: 1,758member
    It is a testament to the pervasive culture of rapacious greed that emanates out of Wall Street that Brett Arends, who last I heard is not a billionaire, has completely internalized the Wall Street fat cat billionaires' attitude of 'no matter how many billions I'm sitting on, it's never enough'.



    It should be quite apparent by now that for Steve Jobs, money, and the accumulation thereof, has never been a prime motivator. Mr. Arends, by implying that in his eyes Jobs is somehow a lesser human being for not voraciously going after those few more billions, has just given us a glimpse into the vacuous, barren expanse that he tries to pass off as his 'bedrock values'.
  • Reply 18 of 75
    kreshkresh Posts: 379member
    Meh, it would have been wealth on paper only. Just imagine Steve trying to dispose of that stock by selling or swapping. Other investors would see that Steve was doing, it would spook them, and the stock price would spiral down out of control in minutes. It would also make everyone else on the Apple stock train paper rich too!
  • Reply 19 of 75
    zindakozindako Posts: 468member
    I was 21 years old back in those days, wish I had the common sense to invest my pennies in AAPL stocks.
  • Reply 20 of 75
    davidwdavidw Posts: 1,280member
    If I recall, Steve turned over his options in exchange for restricted stocks because there was a back dating issue involve with those options. Even though he didn't legally have to give them up. Steve didn't want to be accused of profitting from back dated options when it came time to exercise them. Which he will eventually have to do. He didn't make the exchange because he thought he could make more money holding the stock.
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