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Technology Stocks : Apple Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Don Green who wrote (57782)	10/11/2006 5:02:29 PM
From: inaflash	Read Replies (2) \| Respond to of 213177

In 2000, Steve Jobs of Apple was given a package that would be worth $550 million if Apple's stock rose just 5 percent a year over the next decade. In the same year, Larry Ellison of Oracle was given 20 million options worth around $400 million, even though he already owned 700 million shares in the company. (Were the extra 20 million options really going to make him work harder?) The idea of the CEO as superhero was radically misconceived, and the idea that stock options were free money was senseless. Together, they created an environment in which one of corporate capitalism's perennial problems—self-dealing—could flourish. Options are a very powerful financial motivator. For someone as highly paid as Jobs, it's not as useful, but for other employees and executives, it makes a huge difference. Someone paid $100k/year who might cash in on $1M in options based on company performance is far better aligned with the shareholder. Without that carrot, the same person will demand higher pay or won't care as much about how his performance impacts the bottom line. As far as Jobs, in 2000, when he was originally granted the options, Apple's share price was about $40 (split adjusted for today). In 2003, when he traded in for restricted shares, the stock price was around $15. On paper, it cost $75 million at the time. Doing some simple math: 27.5M shares x ($75-$40)/share = $962.5 5M shares x $75/share = 375 Jobs would have nearly $1 billion by keeping the original deal. Instead, he got $75M then (75M bird in the hand worth more than 1B birds in the bush) and is now worth $375M, while Apple saved $587.5M, which as a stockholder, I've got nothing to complain about. usatoday.com "Yet Apple directors agreed to swap Steven Jobs' 27.5 million worthless options for 5 million restricted shares, valued at about $75 million. "