Restricted stock backdating

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.

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.

If you cover it up and fail to report that expense, the way Apple's folks allegedly did, well, that amounts to accounting fraud.

While a few of those 38 terminations may turn out to be the result of such activity, it's likely that the vast majority fell on their swords to avoid sullying the good names of their companies.

The investigation "found that CEO Steve Jobs was aware or recommended the selection of some favorable grant dates." The committee hastens to add that Jobs "did not receive or financially benefit from these grants or appreciate the accounting implications." In other words, he didn't recommend backdating his own option grants.

Still, given that (a) backdating helps make earnings look better than they are; and (b) Jobs is a huge shareholder of Apple (10.12 million shares, as of last April), how could he not benefit from this behavior? Jobs recommended some backdating dates for other employees.Anderson had already retired in 2004 so, except for giving up some money and his board seat, he got off relatively easy, compared to Heinen.As for Jobs, a report from Apple's internal investigation indicated that, while he was indeed aware of the options backdating, "he did not financially benefit from these grants or appreciate the accounting implications." In addition to vindicating Jobs, that same report fingered Heinen and Anderson.Never mind that Anderson, in a press release, claimed to have informed Jobs of the accounting implications of backdating options in 2001.Or that Jobs gave up his outstanding options, which were "underwater," in exchange for 5 million restricted shares in 2003.At the end of the day, Jobs dodged a bullet because of 1) his value to Apple's shareholders, 2) his value to the U. economy, and 3) just plain luck that neither Apple's board nor the SEC found a smoking gun to force them to do something they didn't want to do.