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.
The bottom line: Claims that Jobs was unaware of the accounting implications of backdating are hardly believable, but there was no evidence to the contrary.
Michigan Ross Professor Nejat Seyhun was among the first to detect the practice that allowed corporate executives to manipulate their compensation by picking stock option grant dates that gave them the biggest windfalls.
He has suggestions on how to end the practice once and for all.
This discussion comment focuses on several fundamental issues that confront researchers examining the backdating scandal and other related decisions.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. Broadcom and others fingered the CEO, but that just shows how subjective this issue is.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.After all, stock option backdating is all the rage these days.You'd think they'd be up to their eyeballs in rope."We thought that enough time had passed to see if these issues had been settled," said Seyhun, Jerome B. York Professor of Business Administration and professor of finance."There was a feeling especially among the legal community that this practice was done, that there's no more backdating, everyone has been punished, and the issue could be laid to rest." Seyhun, Michigan Ross Professor Cindy Schipani, and visiting researcher S. They found that the majority of companies studied are engaged in some sort of unethical practice that benefits top executives by an average of 6 percent in increased stock returns.In a settlement announced concurrent with the complaint, Anderson - who neither admitted nor denied the allegations - agreed to pay back .6 million and never to do bad stuff again.That seemed like a contradiction to me, but whatever.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. VP, General Counsel, and Secretary Nancy Heinen, and former CFO and director Fred D. The SEC's complaintfocuses on the backdating of two large option grants, one of 4.8 million shares for Apple's executive team and the other of 7.5 million shares for Steve Jobs.Heinen allegedly covered up the back-dating, which caused Apple's earnings to be inflated.Specifically, we discuss the decision models for executives engaged in backdating and the potential role of social networks among directors, selection considerations, institutional voting behavior, and how backdated options can be replicated with existing equity instruments.