Stock option backdating cases

Author: eXtRos On: 15.07.2017

Tobak's take on Steve Jobs' role in the stock options backdating scandal at Apple. In researching this post, I came across a number of recent reports on Henry Nicholas III, the once high-flying CEO and cofounder of Broadcom.

The allegations of illicit sex, drugs, and rock and roll reminded me of the 60s Funny, I can't remember.

While the story was enthralling, I didn't understand what any of it had to do with a federal investigation into stock option backdating. But how does that relate to hiring prostitutes and drugging customers without their knowledge? Said another way, do the feds really need to dig that deep to find enough rope to hang executives with? After all, stock option backdating is all the rage these days.

You'd think they'd be up to their eyeballs in rope. I count no fewer than 38 top executives at 19 high-tech companies that have bit the dust over this stuff. We're talking top executives at big-name companies like Apple, Altera, Broadcom, Brocade, Cirrus Logic, Comverse, KLA-Tencor, Maxim, McAfee, Rambus, Sanmina-SCI, Take Two, Trident, Verisign, and Vitesse.

And we're just getting started. That's serious fallout considering that options backdating is legit as long as the company reports it and accounts for it accurately.

RIM settles option backdating case - Feb. 17,

You see, if you backdate stock options to a date when the price of the stock was lower, then the options are "in-the-money" when granted.

That means the company incurs an expense equal to the difference in the share price between the two dates.

If you cover it up and fail to report that expense, the way Apple's folks allegedly did, well, that amounts to accounting fraud. While a few of those 38 terminations may turn out to be the result of such activity, it's likely that the vast majority fell on their swords to avoid sullying the good names of their companies.

Of course, they may have actually been pushed on their swords by their boards, but let? In the case of Apple, not only did the board send two sacrificial lambs to slaughter, but the feds hung some pretty hefty charges on their necks to boot.

stock option backdating cases

The lambs in question are former Sr. VP, General Counsel, and Secretary Nancy Heinen, and former CFO and director Fred D. The SEC's complaint focuses on the backdating of two large option grants, one of 4. Heinen allegedly covered up the back-dating, which caused Apple's earnings to be inflated. This apparently violates a whole bunch of SEC rules. Heinen also exercised and sold , back-dated shares.

That's a big hit for Heinen who, at 50, presumably had lots of mileage left in her career. Anderson got nailed because, according to the complaint, he should have noticed what Heinen was doing and either stopped it or reported the expense properly.

He also exercised and sold , back-dated shares. That seemed like a contradiction to me, but whatever. Anderson had already retired in so, except for giving up some money and his board seat, he got off relatively easy, compared to Heinen. As for Jobs, a report from Apple's internal investigation indicated that, while he was indeed aware of the options backdating, "he did not financially benefit from these grants or appreciate the accounting implications.

Never mind that Anderson, in a press release , claimed to have informed Jobs of the accounting implications of backdating options in Or that Jobs gave up his outstanding options, which were "underwater," in exchange for 5 million restricted shares in Or that an investigation by Disney into options backdating at Pixar also cleared Jobs of any wrongdoing, even though he helped negotiate the deal in which Pixar's star film director, John Lasseter, received backdated options.

BlueChipPennyStocks - The number one trusted financial newsletter site

Claims that Jobs was unaware of the accounting implications of backdating are hardly believable, but there was no evidence to the contrary. And, he did not directly benefit from the backdated options because they were canceled and exchanged for restricted shares.

Worst case, it happened on Jobs' watch, but he was far enough removed from the action to claim plausible deniability. Look, this stuff isn't black and white. Broadcom and others fingered the CEO, but that just shows how subjective this issue is.

SpeedTrader - Low Cost Stocks & Options Broker

At the end of the day, Jobs dodged a bullet because of 1 his value to Apple's shareholders, 2 his value to the U. Google's first phone has a lot of stiff competition.

Hopefully, its next devices measure up. Today's major tech stories include a massive data breach that exposes American voters, Time Warner's new content deal with Snap and the FTC moves to block a big fantasy sports merger.

Reviews Best Products Appliances Audio Cameras Cars Desktops Drones Headphones Laptops Monitors Networking Phones Printers Smart Home Software Tablets TVs Virtual Reality Wearable Tech Forums. News Apple Computers Deals Google Internet Microsoft Mobile Photography Security Sci-Tech Tech Culture Tech Industry Photo Galleries Video Forums CNET Magazine. Video Apple Byte CNET Top 5 How To Googlicious Smart Home Tech Today News Next Big Thing Special Features CNET Podcasts Laptops Phones Tablets TVs.

How To Appliances Computers Gaming Home Entertainment Internet Mobile Apps Phones Photography Security Smart Home Tablets Wearable Tech Forums Speed Test. Smart Home Best smart home devices How To News Tour our smart apartment Tour our smart house Product Compatibility Amazon Alexa Apple HomeKit Belkin WeMo Google Home Lutron Nest Philips Hue Samsung SmartThings Wink. Cars Best Cars News Reviews Recalls Pictures AutoComplete Carfection Cooley On Cars Concept Cars Electric Cars How to buy the best Coupe Crossover Electric Vehicle Family Car Hybrid Minivan Sedan Truck.

Join CNET Member Benefits Sign In to CNET Signed in as My Profile My Profile Forums Sign Out. How Jobs dodged the stock option backdating bullet Tobak's take on Steve Jobs' role in the stock options backdating scandal at Apple. More stories German police said to raid homes over online hate speech Netflix has branching kids videos! Navigating a nation that lost ride sharing UN wants to build a universal digital ID for your data.

How Jobs dodged the stock option backdating Conversation powered by Livefyre. Uber and Lyft messed with Texas -- and won. Features Google needs to change about the Pixel Google's first phone has a lot of stiff competition. Massive US voter data breach, FTC to block fantasy sports merger Today's major tech stories include a massive data breach that exposes American voters, Time Warner's new content deal with Snap and the FTC moves to block a big fantasy sports merger.

Rating 4,2 stars - 400 reviews
inserted by FC2 system