Apple doesn’t want you to pay any attention to the man behind the backdating curtain. You know, the man named Steve Jobs. And the adoring business media—otherwise frothing with outrage over executive compensation and the backdating “scandal”—have pretty much danced liked dervishes to Apple’s spin. Thankfully we have the (newly minature) Wall Street Journal’s Holman Jenkins to once again point out that Jobs is pretty much “a typical miscreant” when it comes to backdating. It isn’t that jobs wasn’t involved in scandalous backdating, it’s that most of this backdating business isn’t really so much of a scandal at all.
The markets have finally had their say about the wonderfully overblown backdating scandal. When Apple filed its latest mea culpa on Friday along with a board expression of confidence in Steve Jobs's leadership, the company's shares jumped four bucks. Message: The market doesn't give a hoot about backdating. It gives a hoot whether Mr. Jobs might be run out of his job.
This ought to cast a light on whether the drop in market prices of companies in the backdating scandal reflects the shock and horror of investors at the details of backdating -- or shock and horror at the meal that trial lawyers, prosecutors and the media are making of companies caught up in this episode…
Backdating, let's recall, was simply an artifice to allow companies to issue "in the money" options (the terms of which were accurately reported to shareholders) without taking an accounting expense. That's all backdating is. Does it matter in the teensiest whether options are expensed? No, expensing has no probative value whatsoever for evaluating a company's shares or its compensation policies. Expensing creates a junk number, of zero analytical value.
A Typical Miscreant-II [Wall Street Journal]