Apple CEO Loses Out On $10 Billion From Stock Options Adjustment
Not that $75 million is a small chunk of change by any means, but apparently Steve Jobs missed out on a potential $10.3 billion in profits today had he not cancelled his stock options back in 2003, according to AppleInsider.The story is via Brett Arends of MarketWatch. He notes that during the tech bubble burst of 2000, it squelched a lot of companies, such as Apple, whose stock plummeted from $36 down to a mere $7.Arends writes that in 2003, stock options that were granted to employees "seemed completely worthless. After all, Apple stock would have to climb all the way back up to those giddy heights before the options even started to show a profit again."Apple employees had been allowed to trade their options for a lesser number that would become valuable at a lower price. Apple's CEO had canceled his options for $75 million in shares, a move considered to allow the company to offer more options to other employees, and he also reportedly was not done with his moves due to the stock price."Jobs held 15 million options at an exercise price of $9.15, which meant they started to gain value only if Apple stock exceeded that price, and 40 million options at an exercise price of $21.80," Arends continued. "Apple at the time was little more than $7 a share. (These prices have been adjusted to reflect the subsequent stock split.) Total value: $12.8 billion.""In other words," Arends concludes, "Steve Jobs missed out on $10.3 billion in extra profits."But on the contrary, Jobs' 10 million shares that he still maintains today are worth about $2.5 billion. Jobs grabs only $1 in salary from Apple, but gets millions in compensation in stock options.While it may have been the "dumbest trade ever," as Arends remarks, it should also be noted that Jobs acquired Pixar from George Lucas in 1986 for $10 million. He then sold Pixar off to Disney in 2006 in exchange for $7.4 billion in stock, and was also granted a seat on Disney's Board of Directors.For our business-junkies, would you have pulled the trigger like Steve did? Or was it the "dumbest trade ever?" Feel free to leave comments below!Image courtesy of modmyi.com
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