Despite $1 Salary, Jobs Stocks Up With Big Apple Gains

Jan 24, 05:00 AM

Despite a big drop in the price of Apple stock this month, it's fair to say that CEO Steve Jobs earned his pay in 2007.

Disappointment over Apple's revised outlook sent its stock down $16.57, or 11%, to $139.07 Wednesday, making its loss since the end of 2007 a hefty 30%.

But in Apple's 2007 fiscal year ended Sept. 28, Apple shares more than doubled to about $153. For calendar 2007, the stock rose 133% to $198. That stellar performance is why longtime Apple investors are still sitting on big gains and Jobs has seen his stake in the company nearly double in value since fiscal 2006 to nearly $770 million.

According to Apple's proxy statement, which came out Wednesday, Jobs' salary for fiscal 2007 was $1 -- the same he's received since returning a decade ago to the company he founded.

It puts Jobs in the realm of superstar CEOs such as Warren Buffett, who appear to be above the need for a seven-figure salary, says Peter Sealey, a professor of marketing at the Peter Drucker graduate management school. "It's great PR," he says. "But having a stock worth $140 helps. For Jobs, this is almost a religious mission."

In August 2007, Jobs exercised an option on 120,000 shares that were awarded to him in 1997. Although he didn't sell the underlying shares, he netted a paper gain of $14.6 million.

In the past, Jobs' $1 salary has been augmented by huge gifts from the company's board of directors. In 2000, the board announced that it would give Jobs a Gulfstream V jet, the total value of which was about $90 million. (In 2007, Apple reimbursed Jobs $776,000 for expenses racked up in using the jet for business.)

The jet was followed by grants of millions of stock options, which in turn were replaced by a grant of 10 million shares of restricted stock. The restricted stock vested in 2006, but Jobs held onto it. After taxes, Jobs wound up with 5.4 million Apple shares. Last month, Jobs' stake in the company exceeded $1 billion. As of Wednesday's closing price, Jobs' stake is worth $768 million.

Jobs and his company are riding high now, but the board's stock-option awards to the CEO early in the decade almost came back to haunt Jobs. Just over a year ago, Apple's board disclosed that Jobs knew that the company had backdated his options, as well as options awarded to key executives.

Backdating of stock options is legal as long as it is disclosed and accounted for properly, which Apple didn't do. Apple insisted that Jobs wasn't aware of the accounting significance of the backdating. Ultimately, regulators filed charges against two subordinates who had left the company.

Apple declined to comment Wednesday. But Brent Longnecker, a compensation consultant, says that because of last year's backdating issue, Apple is "trying to be as transparent as possible." (c) Copyright 2005 USA TODAY, a division of Gannett Co. Inc. Despite $1 Salary, Jobs Stocks Up With Big Apple Gains
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