Steve Jobs missed out on $10 billion from stock options adjustment
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.
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.
Comments
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...
http://tech.fortune.cnn.com/2009/10/...illion-richer/
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.....?
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.
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.
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)
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.
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.
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?
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'.