Five reasons to fear for Steve Jobs

The options probe nuzzling Steve Jobs is so complicated that it's no wonder we'd all prefer simply to gush about the iPhone. But a report that securities regulators grilled the Apple CEO last week serves as a reality check. The Apple CEO's supreme self-confidence has proved an asset in product design; it's dangerous in his current tangle with the government. Steve Jobs is in jeopardy, more serious than has been acknowledged. Want to sound vaguely knowledgeable about the issue? Five talking points, neatly listed after the jump.

1. The probe into manipulated executive options has a life of its own. Steve Jobs' dazzling unveiling of the iPhone, Apple's new cellphone, may have knocked the stock options scandal off the news. But the Securities and Exchange Commission does not merely target troubled companies such as CNET; it makes trouble, even for companies which are darlings of the stockmarket.

2. Apple's contention, that Steve Jobs did not personally benefit, is bogus, and likely to insult regulators, rather than assuage them. The Cupertino company says Steve Jobs surrendered the options he was so questionably granted, before they were exercised. But there is a standard measure for calculating the value even of unexercised options, about $75m at the time; and Jobs surrendered that manipulated grant in exchange for a new tranche of restricted shares. Apple's last-ditch defense, um, that restricted stock is restricted and can't be sold for three years, is unconvincing. Jobs benefited, and Apple should stop pretending otherwise.

3. Steve Jobs' options weren't merely backdated. Board meeting minutes formalizing the grant were faked, it would appear. That's forgery, which the regulators take very seriously. Even if Jobs wasn't aware of the time that the paperwork had been fixed to that extent, the fabrication of board approval raises some obvious questions: when did the Apple CEO become aware, what action did he take, and how swiftly?

4. Apple has dragged its heels throughout this investigation. The company contended that the options backdating had nothing to do with Steve Jobs, and then it emerged that he was aware that options for other execs had been manipulated to make them more valuable. It maintained the Apple CEO enjoyed no personal windfall from Apple's options manipulation, when he pretty obviously did. And Steve Jobs has still expressed no contrition. The longer Apple leaves its full and frank confession, the more exacting the likely penalty.

5. The SEC, the securities regulator, is not completely insulated from business or political pressure: the agency can't be completely insensitive to the cost of wounding Steve Jobs. Unlike most chief executives, he does actually add value to the company he leads. The extreme scenario, in which Jobs resigns, could knock $20bn off Apple's market capitalization. However, let's say Apple's board, unlike other boards in this position, struggles mightily to protect the CEO who lays the golden gadgets, and stipulate that SEC officials are politic enough to give Apple's board an out. Here's a prediction: the price of retaining Steve Jobs will be an extraordinarily punishing financial settlement.

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