Apple Computer Inc.'s chief executive, Steven P. Jobs, captivated an audience of thousands at San Francisco's Moscone Convention Center yesterday as he unveiled Apple's newest products at the company's annual Macworld trade show.
But this year's show-and-tell is more keenly anticipated than most. Some industry-watchers think the appearance could be Jobs' last as Apple struggles to deal with the backdating of stock options.
Apple stock rose nearly 5 percent last month after the board issued a report from a panel led by former Vice President Al Gore that concluded Jobs had broken no laws.
Apple investors and the company's board want to shield Jobs from the effects of the options backdating that has already called into question the judgment of two Apple executives.
Lucian A. Bebchuk, director of the Program on Corporate Governance at Harvard Law School, says: "It's clear that the board very much wanted him to stay. The market likes an outcome under which he can stay."
Jobs is credited with Apple's triumphant resurrection. After he was ousted in a 1985 boardroom power play, Apple spent the next decade staggering toward bankruptcy.
Since his comeback in 1997, Apple's core personal computer business has been reborn, with elegant new Macintosh machines and a powerful upgrade of the Mac operating system software. And its iPod and associated spin-offs have proven revolutionary.
Apple, like many other technology firms, has often given stock options to key employees. Options give the holder the right to buy company stock at a predetermined price, say $10 a share. If the stock then rises to $20, the option holder can still buy the shares for just $10, even though they're worth twice as much.
But companies have gotten into hot water because of a practice called backdating. This involves issuing options but altering their issuance date to an earlier time when the share price was lower than the current price.
It only takes the stroke of a pen, but backdating can sharply increase the value of options. It's perfectly legal, too - so long as the company accurately records the true value of the options as a compensation expense.
However, federal securities investigators have found hundreds of instances in which backdated options weren't correctly accounted for, thus reducing the companies' expenses and artificially boosting earnings.
