Steve Jobs To Skate in Options Probe, Says SJ Merc

Silicon Valley's hometown paper, the San Jose Mercury News, says Steve Jobs is unlikely to face criminal or civil charges in Apple's options backdating scandal.

A close review of the events that led to the controversial grant reveals that the backdating emerged from a good-faith, although clumsy, attempt by Apple's board of directors to reward its star chief executive for resurrecting a moribund company.

The Merc's story details a series of stock grants given to Jobs by Apple's board between 1999 and 2003. The grants were often generous (and one was a record breaker) but because of fluctuations in Apple's stock price, Jobs' grants were often underwater. Several times, Jobs gave the underwater grants back, and the board gave him new ones.

However, according to the Merc, Jobs sometimes spent weeks negotiating the price of these new options, which affected their value. Jobs held out for the lowest price, and sometimes the board backdated the options to keep their price low.

The upshot is that neither Jobs nor the board were very good at picking the right number of options at the right price. If Jobs had simply kept all his grants, instead of constantly swapping them for new ones, they would be worth considerably more:

... Last year, Jobs handed back to Apple 4.6 million of his restricted shares - worth $295 million - to pay the taxes on them. His remaining restricted shares are now worth about $494 million.

But given the rise in Apple's stock over the past four years, even that turned out to be a bad deal for the iconic CEO. Had he held on to all of his options, they would be worth about $4 billion right now, even if the 2001 grant had been given the December date.