The early reactions to news that federal authorities are probing the backdated stock option grants to Apple CEO Steve Jobs are coming in. Not surprisingly, the best reactions are coming from the Backdating Dissident Crew (which now includes Jobs himself).
Larry Ribstein at Ideoblog makes the point that no-one negotiating their salary really gives a damn about when a stock option was priced. They care about what you'd care about: that you know the value of the grant and that no-one is going to game the grant by handing the options to you on a high-water stock price date. If you agree on the date of the past, you can understand exactly what the grant is worth. What Steve Jobs cared about was how much it was worth to him. This is an important point that bears repeating: it’s the level of compensation that an employee or an executive cares about. As in, “Show me the money!”
In the typical backdating situation (and there may be some cases of more serious abuse—the things that allegedly went on at Comverse seem far fishier than the typical backdating case), fiddling around with the grant date was not a way for employees or executives underhandedly inflate their compensation. It was an attempt by company to compensate its employees while avoiding having to expense the grant as an “in the money” option. This violated accounting rules (rules by the way that many people seem not to have understood very well) but, well, let’s let Larry ask the appropriate question:
My question: is this really the stuff of a criminal investigation? Which bad result are the screeching journalists and executive compensation moralists going to make us live with: trashing the career of one of the country's most successful business executives? Letting him walk and ruining the life of a young lawyer who found herself in the middle? Or letting Apple off the hook because it's successful and the journalists all have iPods, but sending backdaters at lesser companies to jail?
And over at Houston’s Clear Thinkers, Tom Kirkendalldraws a comparison between the abusive, malicious and absolutely evil prosecution of the Duke lacrosse team with the mob mentality that seems to have arisen in the immediate wake of the first backdating revelations:
In the Duke lacrosse team case, it is particularly ironic that many in the media and on Duke's faculty were enablers of abusive, dishonest law enforcement and prosecution tactics that are far more often used in cases against minorities that those enablers would decry. They now share responsibility for the continued use of such tactics long after the spotlight on the Duke lacrosse team case has moved on to the next fixation of the mob.
A report on the Apple investigation [Ideoblog]
Rabinowitz on the mob in the Duke lacrosse team case [Houston's Clear Thinkers]