Executive Compensation, Stock Options & Fiduciary Responsibilities
In the movie Pirates of Silicon Valley, there is a scene where co-apple founders Steve Wozniak and Steve Jobs have a discussion regarding the $116 million worth of stock options granted to Steve Wozniak. In the film Wozniak complains to Steve Jobs that the amount of stock granted to him was just too much for him to fathom, given his meager upbringing and current simple-lifestyle. Woz, as he is commonly referred to in the movie even informs Steve Jobs that he is going to give (transfer) some of his stock ownership rights to other early employees like Daniel Kottke, Apple’s first official employee. Although this was generous decision on behalf of Wozniak, according to Prof. Jeanne Calderon, Apple and it founders are not legally required to issue IPO to its original employees (Daniel Kottke) as long as the information expressed in the “IPO prospectus and the SEC registration process precisely corresponds with actual conduct of the company.” Since, Steve Jobs and Steve Wozniak were the founding members of the Apple it is reasonable for them to profit substantially from the company’s initial-public-offering (IPO). However, it is still interesting to note that the discussion of excessive stock option grants precisely followed the induction of John Sculley as Apple’s new CEO. The movie is historically inaccurate because it suggests that Apple’s IPO occurred, specifically, in tandem with Steve Jobs relinquishment of power to Sculley, when in actuality the Apple went public in 1980 whereas Sculley officially became Apple’s CEO in 1983. What is even more concerning about this scene was Steve Jobs close affiliation and integral influence in recruiting John Sculley as Apple’s CEO.