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Nancy's Nightmare Over?

Steve's way of thanking twenty years unswerving loyalty.

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Former Apple/NeXT general counsel Nancy Heinen has arrived at a settlement with the US SEC without admitting or denying wrongdoing and will pay $2.2 million in fines and be barred from service in a public company for five years.

Nancy was accused of 'cooking the books' for Steve Jobs to give him better returns on his Apple perks - and according to Steve Jobs and the SEC she did this behind Steve's back. Quite the feat with a micromanager like Jobs hovering over everyone.

The case has continually puzzled the industry as Nancy had twenty years of impeccable service as general counsel for Steve Jobs in her CV and the thought she would on her own incentive do such a thing without so much as consulting Jobs strikes most freethinkers as 'unbelievable'.

'It's a tragedy for someone who has as much commitment to integrity as Nancy does', said James Pooley.

'It's simply unfair to single out Nancy for enforcement action from among the thousands of executives in hundreds of companies all over this country who've been swept up in these stock options cases. Nancy didn't backdate stock options and she didn't deceive anyone', said Miles Ehrlich.

Or as the San Jose Mercury News put it.

Basically people are supposed to believe Nancy Heinen, having performed her duties admirably at NeXT and thereafter at Apple, who forward dates her own options even though she loses money because it's more fair, suddenly decides to do something totally out of character - something illegal? To engage the services of a secretary to make up minutes to a meeting that never took place? That profits the $1 CEO over $20 million - and he's never to know of this?

But in cases such as this it's always the guys further down the hierarchy who get to be scapegoats. All the while the real culprits drink a glass of juice with their buddies and get off scot-free.

Bono Voce

Former Apple CFO Fred Anderson was also hit by the SEC investigation but his good friend (business partner) Paul Hewson came immediately to his defence.

'Fred Anderson is a man of the utmost integrity. He is a man to whom you would give the keys to your life and know it would be calmer, tidier and better organised every day he was in it.'

Needless to say no one believed the hype surrounding Anderson either. Yet Anderson too had to pay the SEC.


Nancy's legal rep Cris Arguedas has of course always argued his client is innocent. She wasn't backdating as the SEC have claimed - she actually was led to believe the date for the options was as she was told and only pushed back the grant date - not the actual date for their evaluation.

Far from trying to bilk investors, Nancy was trying to help the company by avoiding charges they had spring-loaded options grants just before Jobs gave his stock lifting keynote at the January Macworld trade show.

Which seems in character for those who know her.

I Know Nothing!

Given Jobs' role, many experts and Silicon Valley insiders wondered whether the government would go after him or give him a pass. They needn't have wondered. Michael Dicke [sic] of the SEC came out and denied any wrongdoing on his or Jobs' part.

'Did Jobs' prominence affect the investigation? Absolutely not. Any decision we make about whether to bring an enforcement action is based on the strength of the evidence or lack thereof.'

As taken from the famous quotes of Manuel of Fawlty Towers: Joke of the Year™. And Jobs ain't from Barcelona.

And Now?

So what will Nancy be doing now? Not working for Steve Jobs of course. And that's regardless of whether she's able to hold office or not. Steve Jobs' way of rewarding unswerving loyalty has a way of interfering.

Rarely have so many avoidable problems been created by one man's obsession with his own image. Then again, this is Steve Jobs we're talking about.
 - Joe Nocera NY Times

Did that mean that Jobs was willing to go back to his $1 a year salary? Hardly. So at the same time, he and the board began negotiating a new package - 7.5 million stock options this time at a price of $17.83. Those options were agreed to by the board in late August 2001 - barely two months after the Fortune cover story - but the final negotiations with Jobs weren't completed until mid-December.
 - Joe Nocera NY Times

Let's be clear here. I am not saying Steve Jobs committed a crime. What I am saying is that it is pretty obvious by now that Jobs was extremely involved in both of the options grants that have become such problems. The notion that Jobs, a notorious micromanager, would be oblivious while his team worked on these grants is pretty ludicrous.
 - Joe Nocera NY Times

The options were so far underwater - and he had so little faith they would ever be in the money - that he felt it wasn't worth the bad press to hold onto them.
 - Joe Nocera NY Times

What a delicious surprise to discover that Jobs, who had ostentatiously taken only $1 in salary since returning to Apple in 1997, had a stock option package bigger than that of such well known greedheads as Sanford Weill of Citigroup or Michael Eisner of Disney.
 - Joe Nocera NY Times

You hear from lots of market-savvy people that it would be terrible for investors if Jobs were forced out at Apple because of the options backdating scandal. How, they say, will that help Apple shareholders? However, lots of other CEOs have lost their jobs because of options backdating, and several have even been indicted.
 - Joe Nocera NY Times

However indispensable he may be, there is something terribly corrosive about the notion that Jobs can't be touched because, well, he's Steve Jobs.
 - Joe Nocera NY Times

See Also
Rixstep: Nancy's Gone
Rixstep: Whither, Fred?
Rixstep: Falsified Documents
Rixstep: AAPL CEO Should Step Down
Rixstep: Steve Jobs' Unearned Free Ride
Yahoo Finance: AAPL Insider Transactions
Red Hat Diaries: What is Steve Jobs Good For?
The Technological: MUFF - Totally Irretrievably Round the Bend
The Technological: The US Securities and Exchange Commission

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