|[6:00 AM] Steve Jobs: Staggering Options And A Nice Plane Later... What It All Means
by Bryan Chaffin
Now that Steve Jobs has announced he will be the Internet CEO, rather than the Interim CEO, the Mac and financial worlds have been waiting to find out how he would be compensated. Since his ascension to the iThrone at Apple, Mr. Jobs has earned a paltry US$1 per year, and that was only for legal and health insurance purposes (Mr. Jobs wanted to have his family covered under Apple's health insurance plan). Interestingly, Mr. Jobs is keeping his salary at only US$1 per year, but the company has also rewarded Mr. Jobs options on ten million shares in Apple's stock. There is also an airplane involved. According to Apple:
Apple® today announced that its Board of Directors has unanimously voted to grant the Company's CEO Steve Jobs stock options to purchase ten million shares of Apple common stock and to give him a Gulfstream V airplane in recognition of his service to the Company during the past two and a half years.
"Apple's market cap has risen from less than $2 billion to over $16 billion under Steve's leadership since his return to the Company two and a half years ago," said Apple Board member Ed Woolard. "Steve has taken no compensation thus far, and we are therefore delighted to give him this airplane in appreciation of the great job he has done for our shareholders during this period."
"Steve's stock options were granted a week ago at the then-market price, and will gain value only as Apple's stock price rises, to the benefit of all shareholders," said Apple Board member Jerry York. "This grant reflects Steve's and the Board's confidence in the future value of Apple."
Steve's salary will remain at $1 per year.
You can find more information on Steve Jobs at Apple's web site. Apple also announced their quarterly earnings yesterday that included paying for the Gulfstream V and associated taxes (US$90 million). Those costs were offset by higher than expected sales of Mac OS 9 and still left the company with a hefty profit of US$183 million.
The Mac Observer Spin: When Steve Jobs first took the job of iCEO at Apple, he did so under his own rules. One of those rules was that he would only make US$1 per year as compensation. According to interviews he has given since then, the reason for this was so that he would be free to do whatever he wanted to do. No one would be able to say he was doing it for the money, and in effect he was not answerable to anyone, and free to slash and burn whatever he felt needed to go.
Incidentally, and take notes here, the ten million shares Mr. Jobs has options on are worth a little more than US$1.06 billion today (US$1.13 billion if the after hours trading price of US$113 at Island is used to calculate the figure). Assuming that the "week ago" period mentioned by Mr. York in the above press release refers to last Wednesday (one week before the announcement was made), then the options were granted at 87 3/16, for a total cost of US$871.875 million if Mr. Jobs were to exercise them all at once. Normally, stock options are granted at very low prices, say as low as US$10 per share for a stock trading in the US$30 to US$90 range, so this is a very brassy move for Apple and Mr. Jobs to make. Sure, he's made some US$260 million in the last week, but it still means that Mr. Jobs is putting his money where his mouth is.
This also puts those 1.5 million shares that Mr. Jobs unloaded at a bargain basement price before he took over the iCEO job in the first place. At that time, he thought the company was going to whither away to nothing.
This is a very aggressive compensation plan for Apple. It slaps traditional approaches of huge salaries and golden parachutes in the face. Mr. Jobs will only make money if he brings value to the share holders, and that's it. The lack of a golden parachute in and of itself is highly unusual. There will likely be lots of commentary on this from the financial world. Then there's that little airplane. That's a nice perk that Mr. Jobs has certainly earned.
All in all, we think that this package is a great thing for Mr. Jobs and Apple. May he make a fortune. :-)
[Editor's Note: Some mainstream news sources are reporting that Mr. Jobs's options cost only US$87 million and are worth a mere US$106 million. We are working to make sure that we are correct on in our valuation. You can check back here later today for final figures.]