With the exception, perhaps, of Jonathan Ive, no-one at Apple worked harder and contributed more to help Steve Jobs rebuild the company than Fred Anderson. It was Anderson, appointed CFO the year before Jobs’ return, who resolved the major liquidity crisis that Apple faced in the mid-nineties, when it was in debt to the tune of $63m, and put it in a position where, by the time he retired in 2004, it had nearly $5bn in the bank.
Anderson and Jobs worked closely together to make sure that Apple’s return to greatness was built on the most solid of foundations. Their offices were down the hall from each other at 1 infinite Loop, they could practically see each other from their desks. Anderson oversaw the re-structure which put Apple on the path to profitability, Anderson and Jobs worked together to reduce Apple’s inventory to only a few days — something Jobs was so proud of he used to make a point of commenting on it during his Macworld keynote speeches. And it was Anderson who served as the chairman of Apple’s investment review committee, overseeing the investment of $4bn in assets. At Apple, of course, nothing happens without Jobs’ agreement, and so the two worked closely together.
Anderson also said that he now believes the board may not have approved the options grant. In other words, he believes Jobs lied to him and he believes the minutes were fabricated.
It was inconceivable to many observers then when, late last year, it emerged that Anderson was being investigated in relation to stock options backdating irregularlities, that he could have done anything so profound without Jobs’ knowledge. And, sure enough, after it had concluded its own investigation, Apple admitted that Jobs had known some of what had gone on, but had not understood the full implications and had not benefitted financially. And now we know more.
On the day when Anderson was charged by the SEC and agreed to pay a penalty of $150, 000 and repay $3.49m “ill-gotten gains”, he released a statement daming, albeit diplomatically, Jobs.
The crux of the backdating scandal at Apple is the minutes of a non-existent board meeting. Apple’s rules state that all option grants must be agreed by the board, a fact which Anderson made clear to Jobs. Anderson said in the statement released through his legal counsel that Jobs assured him they had been. They hadn’t. And so minutes for a meeting prior to the execution date of the backdated options were fabricated to create a paper trail. Anderson also said in his statement that he now believes the board may not have approved the options grant. In other words, he believes Jobs lied to him and he believes the minutes were fabricated.
Wendy Howell, a former Apple lawyer, has already said that she fabricated the minutes on the instructions of Apple management, though Nancy Heinen, Apple General Counsel at the time, denies she gave the order. As Secretary to the board, Heinen signed off board meeting minutes.
When Heinen left the company and immediately instructed a legal team to act on her behalf last year, and then Anderson resigned form the board at Apple, some felt that they were being hung out to dry to protect others. It was clear that what was once a great relationship between Anderson and Jobs had turned sour. Anderson’s latest revelations demonstrate that there’s a chasm between the two men that will never be closed.
Update: Apple board members released the followings statement this afternoon. ‘We are not going to enter into a public debate with Fred Anderson or his lawyer. Steve Jobs cooperated fully with Apple’s independent investigation and with the government’s investigation of stock option grants at Apple. The SEC investigated the matter thoroughly and its complaint speaks for itself, in terms of what it says, what it does not say, who it charges, and who it does not charge. We have complete confidence in the conclusions of Apple’s independent investigation, and in Steve’s integrity and his ability to lead Apple.’
Popularity: 16% [?]

Thanks for visiting Random Inactivity. If you're new here, why not take some time to look around and please subscribe to my RSS feed



6 responses so far ↓
1 Bill Balmer // Apr 25, 2007 at 7:43 pm
Don’t forget the whole idea of this investigation is to protect the shareholders. If Jobs was gone it would devastate Apple and the shareholders would immediately loose maybe thirty billion dollars. With proper accounting this will cost shareholders a fraction of one percent of the Jobs loss. Even if a criminal investigation took place the crime is in the hands of those charged already so all those Windows drones who hate Apple will just have to swallow hard and get over it.
2 Kenny // Apr 25, 2007 at 10:07 pm
You’re right, in a sense. The job of the SEC is to protect shareholders and shareholders would be worse off in the long run if Jobs went. However, the SEC also has rules to be upheld and if these rules are broken, it has to act.
In this case, there was no evidence that Jobs any rules so there was no case to answer. If he had, it would have been a very interesting philosophical debate.
3 jbelkin // Apr 26, 2007 at 2:50 am
The other thing to note in the discussion is it’s not illegal to backdate options and at that time, not even considered unethical - it is illegal to secretly backdate options but since tis was being discussed with the board AND they were discussing moving dates around, it wasn’t exactly a hidden deal. Now it is illegal to pretend the board met or as with other execs where they sat in on the board meeting and granted to himself but it’s not the case here. Yes, you can say it’s unethical or just not proper but they were openly discussing moving dates to benefit Steve - again, a normal course of business then in Silicon Valley to reset options because options at that time weere not meaured against earnings, it was essentually a “free” ride.
4 Kenny // Apr 26, 2007 at 9:34 am
@jbelkin
You’re right, I don’t believe there’s been a suggestion of anything illegal having occurred - although the Attorney General’s office is investigating some aspects. The key was whether SEC rules had been breached and whether the backdated options had been properly accounted for.
The fact that Apple had to restate its earnings suggests they weren’t properly accounted for originally.
As for pretending the board met. It’s a moot point whether the pretence was that the board met or merely that someone was instructed to retrospectively alter the minutes to make it look like they agreed to something which wasn’t in the original minutes.
5 dfjhepg // May 11, 2007 at 8:47 am
Best Flowers for You or your girlfriend!
Flowers
flower tucci
6 ozvr jmycnfr // May 13, 2007 at 11:37 am
zujcdke esmz xfvqrln pwusg ehkqlzvxs enuopglyx amsrkuo
Leave a Comment