Why Steve Jobs should be punished for the options backdating chicanery at Apple. And why he won't be.

Commentary about business and finance.
Jan. 8 2007 6:36 PM

Snow Jobs

Why Steve Jobs should be punished for the options backdating chicanery at Apple. And why he won't be.

(Continued from Page 1)

CEOs at other companies have been forced to resign for such activities. So why is Jobs getting off so easy? His job may be saved by the fact that he did not directly profit. More likely, though, he's been saved by his special status. Jobs is Michael Jordan in the 1990s, Citigroup in the 1980s, Walter Cronkite in the 1960s. He's a revered Hall of Famer who doesn't get whistled for fouls that send other pros to the bench.

Jobs is too big to fail. He is too popular—among investors, journalists, employees, analysts, and in the culture at large—for anyone to recommend that he be deposed. Without Jobs, after all, there would be no Apple. The scandals at Enron, WorldCom, Adelphia, and everywhere else ended the era of the rock-star CEO. But Jobs is the lone exception, as revered today as he ever was. Apple's 30-year history is divided into three phases: the golden early years in which Jobs and co-founder Steve Wozniak revolutionized the computer industry (1976-1985), the dark ages in which the company floundered after Jobs was ousted (1985-1997), and the glorious restoration (1997-present), in which Jobs ushered in a new golden age, making hip new computers and revolutionizing the music and entertainment industry with the iPod.

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Everybody loves Steven. Employees love their visionary leader who has spread options throughout the company. Stockholders and analysts love him for delivering stunning returns. Consumers adore him for liberating them from the tyranny of expensive CDs and crappy radio. Creative types love Jobs for creating the iMac, a hipper alternative to the blocky PC. As Jack Shafer noted in 2005, even the press loves Jobs. Nobody—no board member, or analyst, or hedge-fund manager, or columnist—will step up to say that Jobs should go. A future without Jobs is simply too grim to contemplate. Writing in New Yorkthis week,John Heilemann cites an analyst who believes the company would instantly lose $14 billion in market capitalization if Jobs were forced out.

In the 1990s, nobody—officials, opponents, NBA Commissioner David Stern, television announcers—suggested Michael Jordan be called for traveling when he palmed the ball and took an extra step while driving to the basket. Just so, which midlevel investigator at the Securities and Exchange Commission would have the temerity to recommend to Chairman Christopher Cox that the agency haul the most successful Silicon Valley entrepreneur into court? Which junior federal prosecutor will recommend indicting the guy who smashed the PC monopoly?

As with Jordan, a different set of rules seems to apply to Jobs. "At the worst, Steve Jobs directed his company to issue him stock options on favorable terms, without bothering with the silly legal necessity of having a board meeting to approve it," wrote Thomas Donlan in Barron's.

Silly legal necessities? Some people call them laws.

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