The June 25 issue of
magazine had a story entitled “Inside the Great CEO Pay Heist” that featured Apple CEO Steve Jobs on the cover. The caption below his mug shot said that his Apple stock options are worth US$872 million. However, in the latest issue of
, Jobs writes in a letter to the editor that this isn’t true.
“In fact, [the Apple stock options] are worth zero,” Jobs says. In January 2000, Apple granted me an opportunity to purchase 20 million shares for $43.59 per share. Since then, Apple’s stock has declined (along with most high-tech stocks) and is now trading around $24 per share. So Apple’s current stock price will have to almost double before my options are worth a nickel.”
Jobs said that he’s sure the Fortune staff knows how stock options work and so “bent” the truth in order to sell magazines. However, if they really do think his penniless stock options are worth $872 million, Jobs offers to make them “the deal of a lifetime and sell them to you for just half that amount.”
In response, Fortune says they “should have stated in the story that Jobs’ options are currently underway,” they don’t expire for 10 years. If Apple stock appreciates for the decade after the grant at the rate it did for the decade before (about 9.2 percent annually), his 20 million options would give him a gain of $1.2 billion, according to Fortune.
“Our $872 million figure was the grant’s ‘face value’; the number of shares times the market price on the grant date,” Fortune says. “That is a common way of expressing the size of such grants and was discussed in the article. While we think his offer to sell us his options for $436 million is amusing and potentially a good deal, Fortune isn’t sufficiently capitalized at present to take advantage.” (Thanks to MacCentral reader George Zamora for the heads-up on this one.)