In a measured and persuasive column posted this morning, New York Times writer Joe Nocera provides all the relevant background and cuts through the irrelevant rationalizations on his way to this sound conclusion: If this stock-options backdating business matters enough to cost other CEOs their positions, other executives their millions, and see a few indicted - and it does matter enough - then it matters enough to put the screws to Steve Jobs in a much more vigorous manner than has been applied by Apple's board of directors and federal regulators.
This week's series of events saw the Securities and Exchange Commission come down on a pair of former Apple executives - CFO Fred Anderson and general counsel Nancy Heinen - followed by Anderson pointing the finger of blame at Jobs and the Apple board issuing a statement of support for its rock star. And, coincidentally, the company announced sterling financial results and saw its stock price reach new heights.
So, those who have Times Select accounts should read the Nocera piece. For those who don't, here are a few choice selections:
(Heinen and Anderson) were the two executives the Apple board has been pointing the finger at ever since it completed its internal investigation last fall. The S.E.C. seemed to agree: its body language this week strongly suggested that it had zero interest in pursuing Mr. Jobs.
The agency's position seems to be that the financial chief and general counsel are the ones who are supposed to ensure that options are handled correctly, and therefore both Mr. Jobs and the Apple board are off the hook.
As appealing as that thinking may to Apple Nation, it doesn't exactly square with the facts as they are known, Nocera argues.
With all the finger-pointing, it is difficult to parse whether Mr. Anderson, a wealthy, widely respected figure in Silicon Valley, did something deserving of government sanction. What is clear, however, is that Mr. Jobs does not deserve the free ride he's been getting from the Apple board, the company's investors and government regulators.
I am not saying Mr. Jobs committed a crime. What I am saying is that it is pretty obvious by now that he was extremely involved in both of the options grants that have become such problems.
So it is hard to see how he doesn't deserve his share of the blame for what happened.
In the piece, Nocera spells out in great detail the role Jobs played in both of the options situations that have come under scrutiny. And, he rues that such details may not be the central point in the minds of some.
There are lots of people in Silicon Valley who strongly believe that this sequence of events is hardly worth a parking ticket, much less a big-time S.E.C. investigation. But the S.E.C. clearly viewed it as serious enough to charge Mr. Anderson. ...
What is particularly galling is the double standard. You hear from lots of sophisticated investors that it would be terrible if Mr. Jobs were forced out at Apple. How, they say, would that help Apple shareholders? But lots of other chiefs have lost their jobs because of options backdating, and several have even been indicted. However indispensable he may be, the notion that Mr. Jobs can't be touched because he's Steve Jobs is something terribly corrosive.
Nocera begins his column with an anecdote about Jobs flipping out over a June 2001 cover story in Fortune magazine - one Nocera helped prepare - that pictured him under the headline: "Inside the Great CEO Pay Heist." The negative publicity sparked by that story set into motion the initial stock-options restructuring that brought Jobs and Apple to the position in which they stew today, according to Nocera.
Jobs would do well to take this morning's press broadside a bit more in stride.
Everyone else would do well to give it their full consideration.
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The negative publicity
The negative publicity sparked by that story set into motion the initial stock-options restructuring that brought Jobs and Apple to the position in which they stew today, according to Nocera.
It doesn't seem this is an unbiased article. Nocera seemed to be annoyed that his piece about the Great CEO Pay Heist wasn't entirely confirmed, that the S.E.C. didn't view it as a pay heist and he is on a jihad to get Jobs punished. To that end, he employed several fallacies:
I am not saying Mr. Jobs committed a crime. What I am saying is that it is pretty obvious by now that he was extremely involved in both of the options grants that have become such problems.
He can't say and he has no proofs, but Jobs deserves a share of blame. Why? Because it's obvious. Who cares about the S.E.C.'s investigation?
With all the finger-pointing, it is difficult to parse whether Mr. Anderson, a wealthy, widely respected figure in Silicon Valley, did something deserving of government sanction.
Respected enough to cash in on the option he allegedly warned Jobs? That's actually what got him:
But the S.E.C. clearly viewed it as serious enough to charge Mr. Anderson. …
If Mr Anderson is guilty, then Jobs is surely guilty too. Yes siree, without a doubt.
But lots of other chiefs have lost their jobs because of options backdating, and several have even been indicted.
Does he know that backdating is not illegal? What's illegal is if it was improperly accounted. That's what got those chiefs. The question is, did Jobs falsify the board minutes? The S.E.C. didn't think so, and more will come out at Heinen's trial. Did Jobs improperly accounted the backdated options? Accounting is the job of the CFO, isn't it? Strangely, Nocera wants people to think Anderson is respected and wants to smear Jobs. Why?
clearly biased
You're not saying Mr jobs comitted a crime? So what are you saying? What is extremely involved? Any and all legal misconduct was Mrs Heinen's direct responsability and as such it was her duty to report to the board. Any and all financial dwellings were the direct responsability of Anderson and it was HIS duty to inform the board of any irregularity. So what's this guy mean with extremely involved? Does he think a place like Apple is run like a burger joint? This is biased stuff, smearing. One wonders what Mr Nocera's own interest is.
Hunting of Steve Jobs and Apple
This looks more like a calculated and concerted effort to bring Steve Jobs and Apple down because of their success in changing the established computing (Microsoft and its minions), entertainment (music and video industries), and communication (Verizon etc.) paradigms that are making a lot of established fat cats to wake up and pay attention to the needs of the paying public.
Great article
Nocera's NY Times article is excellent. There's a lot we don't know about the SEC investigation, but Nocera pretty much sticks to what we do know. And I have to agree with him that there is something to be said about a CEO who creates a work environment in which consumate professionals like Anderson and Heinen choose to do what they have been charged with. Nocera provides clear motivation. We'll see if the SEC discovers more about Jobs, perhaps through its negotiations with Heinen or through further talks with Anderson now that he can't be charged again for the same activities. Apple Inc. has been let off the hook, but let Steve Job stew until this is resolved. He deserves it. I'd also recommend that Apple's board keep quiet, lest they wish to be taken to the woodshed by the SEC for unethical behavior, as well.
Jobs has nothing to worry about
The SEC will not learn anything new from Anderson. Anderson would have already pulled out the big guns to try and avoid being sanctioned by the SEC. He definately already told the SEC what he told the public about Jobs. Moreover, Anderson is still worried about the DOJ, which could still charge him with committing a crime, whereas the SEC matter was merely civil. As such, Anderson will not be admitting anything to the SEC because the DOJ could then turn around and use that against him. Anderson got off light, and he wants to keep it that way.
Moreover, the two consumate professional that you refer too were two of the few top managers that surivied Jobs return to Apple. Nancy was responsbile for Apple's buying Next, and Jobs trusted Fred. In fact, Jobs trusted Fred so much that he let him handle practically all WallStreet matters. You will notice that Jobs never handled shareholder related meetings, which many CEOs tend to do. These were always run by Fred. Jobs also referred all finance questions to Fred. That is relevent because many CEOs have avanced business degrees in accounting. Jobs does not. In fact, Jobs doesn't have any degree. As such, he would let the lawyers and accountants handle the complicated legal requirements. Doing so is a standard practice, and legal.
Finally, the SEC will not be taking Apple's Board to any woodshed. Apple's Board was responsbile for completely complying with the SEC's investigation, including hiring a private firm to investigate Apple to find the truth of the matter. Apple's Board, like the SEC, is there to watch out for the shareholders. The shareholders want the Board to address Fred's comments, and it rightfully did so. Jobs isn't stewing either because the SEC would have charged him already if it was going to. Moreover, Nancy surely already came up with all kids of fanceful things to say about Jobs and Anderson. However, the SEC didn't buy her version of events.
The glorious NYT! It ain't
The glorious NYT! It ain't what it used to be.... Sure Jobs makes a lot of money - $1 salary. Nocera should do one of those cool journalist things - try out the $1 salary too.
this is to protect the stockholder?
if they go after Steve Jobs, explain to me how this is in the best interest of the stockholder?