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Subject:  Re: The WSJ: New Look, Same Blind Spot Date:  1/4/2007  1:17 PM
Author:  crassfool Number:  200301 of 603896

WatchingTheHerd says

In the installment for January 3, 2007, Jenkins provides a bit of an update on the backdating saga at Apple Computer but quickly reverts to his prior arguments that backdating is a ethically harmless way to provide the economic equivalent of a comforting psychological "sippy cup" to executives by ensuring their options are "in the money" during their entire vesting period.

Soooooooo... Lemme get this straight.

We have executives who are supposed to possess the cutting edge financial savvy and nerves of steel required to make decisions about BILLIONS of dollars of revenue streams denominated in dozens of world currencies, choose investment strategies for capital investment across dozens of countries with varying tax rules and depreciation rules, and select hedge fund investments to protect BILLIONS in free cash belonging to stockholders that they've decided to horde in the company treasury.

These are the same executives who need to have options granted "in the money" because they are NOT sophisticated enough deep down in their morally and ethically pure souls to understand the true economic value of an option grant worth a few piddly million dollars?

Good post overall, WTH. However, Apple is not a strong example. Consider that at the time of the options backdating, the leadership was a bunch of guys who had pulled off a takeover after their company was bought by Apple. They went from a company that was drifting sideways to one that was in serious danger of going down the tubes, and it looks to me like the options contributed to keeping them on board, especially the technical leadership.

Now the bad thing about the backdating shenanigans is supposed to be the dilution of shareholder value. I don't know how to calculate the loss due to dilution by those stock options, but during the subsequent years, AAPL went from the 4 - 6 dollar range to the 60 - 85 dollar range. As a long-term AAPL holder, I am happy enough with the stock performance that I find it impossible to get upset about the dilution.

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