Return to the Little Kingdom_ Steve Jobs and the Creation of Apple - Michael Moritz [141]
During the first eighteen months of Apple’s existence, monetary issues were obscured, thanks to a combination of circumstance and design. The sheer pressure of work provided enough distractions to fill a day while the financial maneuvers of a small private company offered far less opportunity for prying eyes than the visible transactions of a public company. Under California law all private stock transactions were subject to Apple’s seal of approval—a procedure that ensured some discretion. Newly hired hands talked with Scott and Markkula about the possibility of buying stock but the details usually remained confidential. Markkula, in particular, kept a firm grip on the stock, politely telling the occasional outsider who inquired about the possibility of making an investment that the shares were for employees.
But gradually word of private sales, whispers of an engineer who had taken a second mortgage to buy more shares, rumors of stock splits, talk of changes in capital-gains tax rates, and discussions of the advantages of trusts crept into daily conversations at Apple until they became one of the staples of life. Rick Auricchio, a programmer who eventually left the company, said: “I learned as much about stock and taxes at Apple as I did about computers.” Money was an uncomfortable topic that tripped a wide range of emotion.
Distribution of stock, or options to buy stock, became an intractable dilemma that led, in the eyes of Rod Holt, “to a reasonable amount of perfectly justified hostility.” During the first couple of years the distribution of the discreet gray envelopes that contained stock options were accompanied by all sorts of warnings that the contents shouldn’t be treated too seriously. In the early days a few of the recepients were disappointed when they were given a couple of hundred options rather than a pay raise. But the cold force of arithmetic eventually removed any disappointment. For after three hefty stock splits, every share distributed before April 1979 was equivalent to 32 shares on the day that Apple went public, which meant that anybody who owned 1,420 of what were known as “founders’ shares” and kept them until the morning of December 12, 1980, was then worth, on paper, $1 million.
Options to buy stock were assigned to most of the weightier newcomers on the basis of their past accomplishments and the possibility of what they might do for Apple. Some of the cannier recruits turned their job interviews into bargaining sessions and waited to shake hands until the promise of options had reached what they felt was an appropriate level. Others, more innocent in the ways of the corporate world, took a salary and a cubicle. For Apple the pool of options was a powerful recruitment tool and the options that were distributed from time to time were enormous incentives. Scott took particular delight in dangling the prospect of riches in front of people who weren’t convinced that Apple was a worthwhile proposition. He was hard pressed to squelch his chuckles when he informed waverers, “We are making a massive change in people’s life-styles.”
When word of some of the arrangements seeped out, bitterness mounted. Fate and chance imbalance certainly played a part. Those hired within a few days of each other, but on opposite sides of a stock split, wound up with substantially different sums. However, some of the differences resulted from careful calculation. While Apple’s salaried employees were given options to buy stock, the hourly employees were not. This, predictably enough, caused friction. In the laboratories, for example,