Everybody...loves Steve Jobs, so he is going to get away with whatever part he played in the scandal...Mr. Jobs’ rock-star status in the industry may have saved him and his company from a serious setback.
For Apple Chief, Gadgets’ Glitter Outshines Scandal
January 9, 2007, 1:28 pm
As Steve Jobs was preparing to take the stage at the MacWorld trade show to make his buzz-drenched annual keynote address, pundits were piling on to excoriate him for Apple’s options-backdating scandal.
True to form, Mr. Jobs riveted the audience with Tuesday’s unveiling of AppleTV and iPhone, bringing out help from top names like Yahoo’s Jerry Yang and Google’s Eric Schmidt, who briefly joked about an Apple-Google merger: “If we merge the companies we can call it Applegoo — but I’m not a marketing guy,” he said, according to tech site Engadget, before adding, “You can actually merge without merging.”
Still, three recent articles argue that the options issue should — but probably will not — be the real focus.
Their general conclusion: Everybody (except, presumably, for all these pundits) loves Steve Jobs, so he is going to get away with whatever part he played in the scandal. The articles suggest that Mr. Jobs’ rock-star status in the industry may have saved him and his company from a serious setback.
Despite backdating concerns, Apple’s shares closed Tuesday at an all-time high.(Mr. Jobs’ presentation of the iPhone and Apple TV may have done the trick for now. Apple shares closed at $92.57 Tuesday afternoon, setting a record for the stock.)
After an investigation, an internal board committee at Apple said Mr. Jobs was not responsible for the improper dating of stock options, which forced the company to restate its financial reporting back to 2002. The committee found that 6,428 option grants, or 15 percent of the 42,000 options it awarded to employees, had been improperly dated from 1997 to 2002.
But Apple’s options panel also said that Mr. Jobs “‘was aware or recommended the selection of some favorable grant dates.'’ That admission and other factors have led some to criticize the panel’s findings.
After laying out the reasons that he thinks Mr. Jobs is in fact culpable in the scandal, Slate’s Daniel Gross concludes that he has “been saved by his special status.” Mr. Jobs, he writes, “is Michael Jordan in the 1990’s, Citigroup in the 1980’s, Walter Cronkite in the 1960’s. He’s a revered Hall of Famer who doesn’t get whistled for fouls that send other pros to the bench.”
He continues:
Jobs is too big to fail. He is too popular –among investors, journalists, employees, analysts, and in the culture at large–for anyone to recommend that he be deposed. Without Jobs, after all, there would be no Apple. The scandals at Enron, WorldCom, Adelphia, and everywhere else ended the era of the rock-star C.E.O. But Jobs is the lone exception, as revered today as he ever was.
Perhaps even more important, there is lots of money at stake. In New York magazine, John Heilemann quotes an analyst saying that $14 billion of Apple’s market capitalization would evaporate if Mr. Jobs were forced out of the company.
Mr. Heilemann, too, asserts that Mr. Jobs’ rock-star status is what will save him. He writes:
Over 30 years, Jobs has carefully, famously honed his image as the archetypal un-businessman. As an aesthete, an idealist, a man for whom money was peripheral. And now he and Apple are relying on that image to shield him from imputations of financial chicanery. The thrust of their message is that we should believe that Jobs is innocent because he is … Steve Jobs.
Like Mr. Gross, Mr. Heilemann also seems to believe that Mr. Jobs is at least somewhat culpable in the scandal, though he does not draw as hard a conclusion as Mr. Gross does. The internal panel’s own report, he writes “clearly suggests that Jobs was more intimately involved in Apple’s finances than is commonly assumed.” But he takes a wider view of the reasons he thinks Mr. Jobs will skate:
Jobs can surely take comfort in the obvious waning of the political appetite to prosecute the excesses of the bubble. In Albany, the Spitzer era may be just beginning, but in the realm of financial regulation, it seems well and truly over.
Writing in The New York Times, columnist Ben Stein also concludes that Mr. Jobs will benefit from the political climate. Though Mr. Jobs is a “worthy gentleman,” he needs to answer for the scandal, but he won’t have to, according to Mr. Stein. The columnist quickly dispenses with Mr. Jobs himself and moves on to the wider problem he represents -– the growing distaste for regulation among both corporate executives and politicians.
Just look to the conclusions of the Paulson committee, he writes. That panel (officially the Committee on Capital Markets Regulation, informally sponsored by Treasury Secretary Henry M. Paulson) issued a report saying that financial regulation such as Sarbanes-Oxley had become too strict, especially in terms of the internal controls imposed on companies.
Mr. Stein writes:
But hold on. Isn’t backdating precisely an example of a failure of internal controls? Haven’t we just found out that internal controls are far too lax, not too strict? For the Paulson committee to say that we need less stringency in corporate audits is a bit like the War Department saying we needed less watchfulness at our naval bases after Dec. 7, 1941. It’s also a bit like Willie Sutton saying it would be good as a matter of national financial policy to have fewer guards at banks.
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