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I was working as a reporter for PC Week, and it was a late Friday in March when Dan Farber, the publication's editor in chief (who is now also at CNET Networks), walked into my office with a hot tip: Fred Anderson was about to become the next chief financial officer at Apple.
Who the heck was Fred Anderson? Farber shrugged and said all he knew was that the guy worked as CFO at Automatic Data Processing. Long story made short, I tracked Anderson down and asked him point-blank whether the rumor was true. Would he be leaving for Apple?
"Nothing to it," Anderson said, denying the rumor.
A press release announcing Anderson's appointment at Apple rolled off the business wire the following week.
This wasn't the first time in recorded history a muckety-muck stonewalled a reporter. But I figured that Anderson was simply looking out for No. 1, and why risk spoiling his chances for a plum job by blabbing to the Fourth Estate?
I recalled my brief conversation with Anderson this week after he broke his vow of corporate omerta and went public about the most controversial chapter of his decade-long association with Apple as CFO and a member of the board of directors. Through his lawyer, Anderson announced that he had informed Steve Jobs about the accounting implications of an options-backdating move at Apple in January 2001.
That made for quite a headline--not least because it came from the pen of a former insider. Over the years, Apple has perfected the management of its public image. When it comes to presenting its story to the outside world, this is a team that rarely slips up.
But Anderson's a free agent and beyond the reach of Apple's enforcers. And now he's rekindled a controversy that Apple had done its best to explain away.
Apple had assigned a January 17, 2001, grant date to stock options that weren't formally approved until a month later. Last December, the company had to restate its earnings to fix this particular issue. Embarrassing, but nothing worse than what dozens of other technology companies did around the same time.
Fred Anderson
All along, Apple maintained that Jobs was not aware of any accounting issue. But Anderson says he told Jobs that selecting option grant dates other than the actual date approved by the board of directors could force Apple to record an expense.
Apple's board predictably responded by reaffirming its "complete confidence in the conclusions of Apple's independent investigation, and in (Jobs') integrity and his ability to lead Apple."
That's where the matter remains. I'm sure regulators would love to hear more from the company's ex-chief legal counsel, Nancy Heinen, who is defending herself against fraud charges filed by the U.S. Securities and Exchange Commission. In the meantime, Anderson, who paid $3.5 million to settle with the SEC, is free to rat out his old boss if he wants to.
Will he? If Anderson wants to rekindle our long-standing relationship, he's got an open invitation to call me any time to fill in the blanks. Until then, we're left to speculate on motivation.
Anderson is still fuming about his forced resignation from Apple's board. Following the conclusion of an internal investigation into the options backdating mess, he was served up as the sacrificial lamb. Clearly, that's not the way he wanted to end his career at Apple.
So it was that Roger McNamee, a colleague of Anderson at Elevation Partners, offered this tidbit to The New York Times: "Fred's reputation was impugned by Apple," he said. "All he is doing now is responding--with facts. And he is doing so in the most diplomatic way possible."
Sounds more like gunboat diplomacy to me. This could turn into one heckuva donnybrook. You've got nearly all the ingredients: a possible cover-up, recrimination, money and corporate intrigue. All that's missing is a sordid tale of boardroom sex.
But don't let imaginations run too wild. Apple's board is not about to willingly part with its meal ticket. Say what you like about the man, but Jobs is a splendid CEO.
Apple reported financial results far ahead of Wall Street's expectations in its most recent quarter as profits soared 88 percent on a 21 percent sales climb. That was enough to propel the stock price past the $100 mark.
Those are the kinds of numbers that buy lifetime job security. The old-timers at the company remember the prolonged time of troubles (pre-Jobs) endured under a succession of increasingly feckless CEOs. Suffice it to say that Jobs would need to get caught on video robbing every gold brick in Fort Knox in broad daylight before this board would lift a finger.
Anderson's story is still only hearsay. Jobs remains untouched by the investigation into the stock option-backdating scandal. What's got Apple on edge is the understanding that that could easily change.
If the federal government decides to start taking depositions, then the ignorance-is-bliss defense won't hold up. And then we may learn that all these striving, corporate alpha execs just have faulty memories--or that somebody really is a fibber.
Biography
Charles Cooper is CNET News.com's executive editor of commentary.
See more CNET content tagged:
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The article did say dozens of other technology companies. Apple and Pixar are not isolated enought to form correlation like the one you imply.
Anderson is to Jobs as what Fastow was to Lay.
It's crooked no matter how you rationalize it.
Cheeeese, another anti-Apple MS lover.
en
You're not as important as you think you are dude..
1. You start off by giving us a fairly melodramatic account of a lie that any sane person changing high-profile jobs would be obligated to tell.
2. You _unbelievably_ accuse Anderson of breaking 'his vow of corporate omerta and going public'!! If there's anything we need, its more transparency and more executives ratting on each other so that corporate accounting scandals can be brought out into the open. As a journalist its quite rich for you to complain about a guy actually talking!
3. Then you defend Apple (or Jobs - not sure whose fanboi you are) saying this whole scandal is "Embarrassing, but nothing worse than what dozens of other tech companies did around the same time."!! WOW!!
So if I'm reading what you're saying correctly, I think you mean to say that you're ok with options backdating? And you're ok with corporate cover-ups?? Dude -- do you even earn your own money?? If you did you would understand the frustration and pain that white collar fraud causes people (in terms of lost earnings/retirement savings etc.) and you would be baying for Apple's and Job's blood right now.
Oh wait. Job's is just the CEO. He got there without understanding the fairly simple investing concept of 'options backdating'. He didn't know what he was signing 'cos he's _that_ dumb. My bad - I got it all wrong..
The press release came out a WEEK later. Since when do CFOs only give their company 2-3 days notice?
1. Jobs himself and the Board have publicly stated several times he was aware of the grants. The claim is he did not understand the implications of the accounting.
2. If the feds want to depose people? They have, multiple times. As have the SEC. The fact is: even if the Press Release seemed like news and a bombshell to outsiders and "journalists", there is certainly nothing in his statement not already known to the feds and the SEC.
3. What is even controversial about the info in the PR? The name "Steve Jobs"? All Fred said was that when he questioned the timing and accountability of the transaction, Jobs assured him that the Board would approve it and that they in fact already had. How does that turn into a revelation that Jobs was at the center of the grant, he knew its implication, he did the accounting himself, he did the legal work, and he somehow coopted the job of General Council and CFO and accountant from others in the company?
4. The SEC has already expressed that they are satisfied with the cooperation and new remedies at Apple. That they would have a hard time proving a willful attempt to defraud shareholders. The amount was relatively inconsequential ($83 million) versus the harm further action would cause.
These are the reasons that not only Apple but the feds and the SEC are not treating it as anything they didn't already know about; the matter is largely settled.
Not because the Board needs Jobs (although true) and not because Fred once lied to prevent jeopardizing the biggest career move in his life.
The fact is that he didn't have to tell you anything because you were asking on bases of some rumors. As a matter of fact he didn't have to tell anything at all.
Backdating is a fraud. Period. And the quote "I didn't know" didn't work for CA, Enron, Xerox, Nortel and others. Why is Apple any different?
This article was pro-Jobs. I often see articles ripping into Microsoft. I see articles ripping into Apple. I see a lot of things, and overall I think CNET is doing a pretty good job of just reporting the news.
I'm sure there will be people who post that CNET is Anti-Whatever They Believe In shortly.
I hope they don't do that to me.
:-)
I hope they don't do that to me.
;-)
By the way, nice tinfoil hat.
was no fraud intended. Why? Because the board would have paid
Jobs anything he wanted, why would he risk doing somethin
illegal when he can get it, perfectly legal(yes, backdating
options is legal if reported) by just asking...and the board and
Apple shareholders would not bat an eye...he, more than any
one else in business, deserved it. Same for Pixar, he and the
people he hired deserved everything they got and there was no
question that Pixar shareholders and board would have
approved anything he wanted.
not been much interest from his side in these matters. Don't
forget; he brings home a dollar a year from Apple. This job is a
mission for him. Personally I think that it is the "lesser gods" in
Apple that were messing up in their own interest an that of
others they wanted aboard. Clearly, Anderson was responsible
for ANY and ALL financial mismanagement. Heinen for ANY legal
mismanagement. No matter what Anderson may have told Jobs
or in what manner; this stuff is put on the table in board-
meetings, where risks and legal consequences are evaluated and
explained by those primarily responsible to the rest of the
board.
I think this actually happened, albeit too late. The board only
then must have realised that the risks were too high and
Anderson and Heinen had to go.
- You're generally right
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by swift2--2008
April 28, 2007 2:00 PM PDT
- There is one exception: the most frequent headline you see here is
-
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See all 26 Comments >>the announcement of another "iPod killer." Turns out they've been
releasing them for years. iPod still alive.