After months of investigation, the SEC has finally charged former Apple general counselor Nancy Heinen of fraudulently backdating stock options.
Stock options backdating, which involve issuing stock options with a date prior to when the options are given, is basically like giving extra cash to employees that comes out of the shareholders’ pockets. While the practice is not actually illegal, all cases of options backdating must be reported to the SEC, which is what Apple failed to do. As a result, the SEC has been holding an ongoing investigation of exactly who at Apple is at fault, resulting in the charges against Heinen.
But Heinen isn’t the only one at Apple who got blamed. The SEC also charged Apple ex-CFO Fred Anderson of options backdating, but they instantly settled that case. Still, Anderson will have to pay a $150,000 fine and repay the $3.5 million he gained from the fraudulent options. Now, Anderson has turned the blame back on Steve Jobs saying, that he ordered him to the grant backdated stock options.
In my opinion, this whole case slightly lowers my opinion of Apple. Not even did Heinen and Anderson both personally receive millions of dollars in compensation from the options backdating, but Anderson even tried to put the blame on Steve Jobs. This is ridiculous. Apple is a company, not a playground, and its executives cannot simply blame each other when they get rightfully blamed for doing something bad.
Apple has been known to engage in all the odious corporate accounting practices that are in vogue today. Options backdating, excessive management compensation, golden parachutes, outsourcing, layoffs to manipulate quarterly figures, etc.
Every time I deal with Apple directly I'm reminded that they are a big, faceless corporation like any other. Machines are shipped direct from a low wage factory in China. Machines are repaired by Flextronics or another contractor. They are inflexible about mistakes until you elevate to a sufficiently high level.
Apple makes a great product, they have great ads, they have a great spokesperson, but the majority of their day to day operations are little different than Dell, Microsoft, or any Fortune 500 company.