Steve Jobs Lets His Cohorts Take the Fall
April 25th, 2007Once upon a time, in a political climate that was far simpler than that of the 21st century, President Harry Truman reportedly took responsibility for his actions with the phrase, “the buck stops here.”
These days, the blame for a serious transgression of one sort or another is usually deflected to a subordinate who is forced to take the blame for the boss. Does that same philosophy exist over at Apple, Inc.?
Well, consider that the SEC has gone after for Apple CFO Fred Anderson for his part in that stock options scandal that has caused the company to restate its earnings for a period of several years. Former head legal counsel Nancy Heinen, who is facing civil fraud charges in connection with these episodes, is apparently hanging tough, so her case is not apt to be resolved so quickly.
Now it’s not that Anderson and Heinen face jail time for their crimes. They left Apple as millionaires, and facing fines to settle their scores with the authorities will have, at best, a minor impact on their bank accounts. That assumes, of course, that Heinen eventually reaches some sort of settlement, which isn’t certain right now.
As far as Anderson is concerned, his deal with the SEC involves no admission of wrongdoing, so there’s nothing to prevent him from performing the same duties at another company. In the end, it may not be so easy for him to find a new job, as his career has, no doubt, been irrevocably tainted. But it’s not as if his family will suffer, or that he’ll be taunted by kids as he walks the streets, assuming he doesn’t travel strictly by limousine and private jet.
Indeed, what Anderson and Heinen apparently did amounts to the violation of an obscure set of regulations that the companies who violated them probably weren’t all that concerned about. They probably never expected these questionable transactions to become fodder for public investigations, possible prosecutions and constant attention in the business pages of your daily newspaper.
Now it does seem that Steve Jobs has indeed dodged the bullet here. By dealing with Anderson and Heinen, Apple will apparently escape relatively unscathed from this nasty affair. That means Steve Jobs remains as CEO, which pleases customers, stockholders and, of course, Wall Street, no end.
On the other hand, it doesn’t seem as if Anderson wants his former boss to be let off so easily.
In a statement released on Tuesday, Anderson placed the blame for at least part of the stock options affair right into the lap of Steve Jobs. Anderson claimed that he was obeying his CEO’s instructions in following through on those stock options and that he warned Jobs about the possible consequences.
Maybe that statement helps lessen Anderson’s blame in this affair, if we take the claim at face value. But it’s probably self-serving, since it’s not terribly likely that the SEC is now going to refocus its attention on Jobs and somehow force him to face unsavory consequences.
You see, nobody really wants Steve Jobs to leave Apple. Certainly, he’d have to engage in some egregious behavior for the SEC or other authorities to take further interest. To be sure, Apple’s customers are happy with Apple’s product focus since Jobs returned to rescue the company, and the company’s stockholders are certainly pleased with the stock price and profit and loss statements.
Wall Street and the tech press have made Apple the media’s darling for the moment. The four-month delay in releasing Mac OS X Leopard has had little impact. At worst, Apple will simply wait longer for the potential income from the sale of its new operating system, but it’s not as if Mac sales appear to be suffering to any noticeable degree.
At one time Apple probably felt that they needed to get Leopard out quickly to remain competitive with Windows Vista. But Vista is apparently not doing quite as well as Microsoft claims, and sales of new Macs remain ahead of the rest of the PC industry. There’s no serious pressure for Apple, except to deliver the iPhone in time for its promised released date in June, and to build a product that is near-perfect from the get-go.
No doubt the SEC and the question of illegal stock options will be forgotten within a few more months. It probably won’t be resurrected except in year-end reviews, or perhaps in the back pages of a paper’s business section when they run out of material.
Apple ought to consider itself lucky to have emerged from this affair without serious wounds. As for Steve Jobs, let’s just call him the “Teflon CEO,” and that, is they say, is that.
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“Anderson claimed that he was obeying his CEO’s instructions in following through on those stock options and that he warned Jobs about the possible consequences.”
Actually no. Anderson did not mention any consequences. And he did not say that he delivered any warnings, either. He simply asked Jobs if there was prior approval because this is a requirement, and then Jobs said that yes he felt there was prior approval and he further felt that the Board would verify this, which Anderson inexplicably claims he took as suficient to ensure his job was done, without checking with the actual Board or with the General Counsel. Anderson’s job is not to ask the CEO about financial reporting and take his word for it. His job is to ask his underlings who are doing the actual paperwork, not the guy who probably doesn’t know the actual details of what the law requires for there to be technically ‘prior approval’. I don’t understand this relationship. Was Jobs Anderson’s lawyer or something? So both left that conversation with the impression that everything was hunky dory, but only one of them had the actual responsibility to verify that it was — and that was Anderson.
Furthermore, Steve Jobs did in fact step up to the plate at a shareholder’s meeting. He apologised to them for letting this happen “on his watch”. In fact, it’s one of the first things he did. How quickly we forget.
Well, clearly the statement that came through Anderson’s lawyer was self-serving.
I couldn’t and didn’t reach any conclusions about what happened behind the scenes.
Peace,
Gene
Yeah, I’m sure you were there and overheard this conversation between Jobs and Anderson. If not, then I suggest you stop writing such inane articles.
I think you are confusing my article with someone’s comment. Read the article again, please, and you will notice I never said or implied I overheard anything, nor did I report what actually went on behind the scenes. When I mentioned what Anderson said in his statement, I used the appropriate journalistic conditions about the source and you can decide whether you feel it’s accurate or not.
Clearly there are no tapes with 18-1/2 minute gaps to consult on what really transpired.
Feel free to ask me, and I’ll modify your statement to clarify that you probably referred to DBL’s comment, not mine.
Peace,
Gene
I do not understand why so many sites seem willing to ignore months-long investigations, both internally and by the SEC, simply because one of the parties, who settled with the SEC, had his lawyer release a short statement that says… nothing.
There is no blame being placed on Jobs in that statement, no matter how may times you read it. It’s only a statement from Mr. Anderson that essentially targets any potential employers to say “Hey, I’m no idiot, I knew that there were accounting practices and processes that had to be followed.” By mentioning his conversation with Jobs he can get that off his chest.
The issue is that telling Jobs and the board of what needed to be done doesn’t absolve him (or Nancy Heinen) of the responsibility of actually DOING those things. Anderson got a wrist slap and would probably have been fine until his statement, which I think is silly.
As for Nancy, the charges against her are more serious, and that’s the reason she’s “hanging tough”. If it were a similar wrist slap she would have settled, too. They both know they were wrong.