Transforming Fate Into Destiny Book Review - It's Always Darkest Before the Dawn

Robert Ohotto's book Transforming Fate into Destiny arrived on my doorstep at just the right time in winter of 2007. I left a company as Director of Internal Audit when I found that that the company was backdating and spring loading stock options grants. I was the one who was responsible for the initial review. I found so many issues that I recommended a special investigation. A third party law firm came in and did their own investigation and found what I found and more. The management team was in no way happy with my findings or my recommendation and made it extremely uncomfortable for me to stay. I gave my two weeks notice without having another job lined up. Not easy for a single girl with a mortgage to pay. I just couldn't hang out in this rotten, unethical energy environment for one day longer.

Whistle Blowers are about the most unpopular people on earth. The Senior Management team you work for doesn't like you because you found their dirty laundry and a new management team doesn't like you because they're afraid that you'll find theirs. Courage and bravery for doing the right thing are not frequently rewarded in corporate America. For me, I must follow what my spirit tells me is the right thing to do. I can't live any other way even if I have to take a financial hit on occasion.

This wasn't the first time I found evidence of fraud in a company. When I started this position, I was hoping that I wouldn't have to deal with individuals that are part of a management team or board of directors who had the audacity to commit fraud in a public company environment. I spoke with Robert Ohotto in 2007, and he told me that finding these issues is my fate and teaching others about being ethical in corporate America is part of the package-I believe he said I had a warrior archetype. That seems about right. I prefer the Peaceful Warrior archetype.

Transforming Fate into Destiny

Robert's book was definitely helpful to me in taking a look at where I've been and where I'm going. In chapter one, Robert talks about the Soul's two agreements-your Cosmic contract. He discusses the difference between Fate and Destiny. He says that, "Through your soul's agreement with Destiny, you must transform your Fate into something more life affirming, thus leaving this world a better place. Destiny is your capacity to live out the threads of your Fate in a unique way that only you can do, while having a positive vibrational impact on the world's energy."

Chapter two discusses Acceptance and Authentic Choice where we need to ask ourselves if we can accept where we are now and take a look at what we really value in life. Robert says, "...every choice asks us to confront what we truly value. What we choose will always point toward what we hold dear in our hearts, no matter what we say our philosophies are. Values define how we live and what we choose." I might reverse that sentence and say that how we live and what we choose define are real values.

I love when he says, "That said, how do we form our values? Are they even truly our own, or are they handed down by our culture or parents and then unconsciously adopted? If we make choices based on what others hold dear, things that don't resonate with our soul's integrity, just how free are we?" Something to seriously think about if you're not happy with the choices you've made.

What is the Dark Night of the Soul (Ego)?

I particularly liked Chapter 12 where Robert talks about the Dark Night of the Ego or as some call it, the Dark Night of the Soul. I think of the Dark Night of the Soul as that gut wrenching, crying and screaming at the Gods at 3 AM moments of life-when you have no idea why bad things happen to good people like you and you have no idea what to do next to make things better.

Robert explains the Dark Night of the Ego as the period "In Between or Liminality." Robert tells us that, "We need these periods of being 'in between.' That's essentially what a Dark Night of the Ego is: a space in between two identities, a period in which our ego waits to be given new soul coordinates. We must understand that liminity is essential to the revitalization of life and the transformation of Fate into Destiny." He goes on to say that, "...our first instinct whenever any profound change arrives-especially one that will reshape our lives-is to try to keep things the same...This is when we must enter into the space between identities in order to source a fresh solution. If we're going to endure, we must animate our interior life and engage in a dialogue with our soul, allow for something new to be born...we must embrace the fact that this dark state of chaos is the genesis of all things new."

One of the Dark Nights of My Soul

I know the Dark Night of the Soul (Ego) all too well. I was working as a Controller for a high tech start up in 2001. After 9/11, business came to a screeching halt. I was laid off on a second round of lay offs during a very bad time in the economy. As a single woman with a mortgage, it didn't take long to experience the Dark Night of the Soul. On the day of the lay off as I was leaving the office, I heard a voice inside me say, "It's always darkest before the dawn." I wasn't buying it in that moment.

When my unemployment was about to run out (literally my last check), I got a call from a headhunter in Dallas asking me if I wanted to be the Director of Internal Audit for a public company in Dallas (I was living in New Hampshire). I had never been a Director of Internal Audit but I thought, "Anyone can figure out a new position if they put their mind to it." I had been a CPA for a big 4 public accounting firm. I had been a Controller for a company but never Director of Internal Audit-a completely different type of role for me. I had nothing to lose and the money was running out, so I said I would take the interview. I flew down to Dallas praying that I wouldn't have to relocate there, but I resigned myself to follow the flow of events wherever they wanted to take me.

Within a few days of the interview, I was not only offered the position, but the CFO let me work from my home office since I would be traveling around the world. He also ended up to be one of the best CFOs I've ever worked with. This position allowed me the freedom to plan my own schedule, and I was able to travel to places I had only dreamed of, such as Paris, Brussels, Zurich, Geneva, Johanesburg and Venice--all paid for by the company for business.

It was always my ultimate dream to go to Venice some day. For years, I had photos of Venice in my home. The Dark Night of My Soul/Ego decided to bring me to Venice in a big way. Over the course of a year, I spent quite a bit of time with a business unit in Treviso, which is outside of Venice. I got to know and love the people there. I was able to take the train to the Grand Canal during the weekend for fun. I was even able to attend the Christmas party of our subsidiary company in Venice. There was an eight course Christmas dinner party held at a beautiful family owned restaurant which was part of a vineyard. I got to taste the most fabulous wines with every course and met people from all over Italy. What I learned is that dawn does come after the darkest of nights and it can bring the brightest of light to the Soul. It can transform the fate of a lay off into the destiny of positive career changing job and a trip to a location of your dreams.

If I never experienced the Fate of a lay off, who knows if I would have ever seen Venice in my lifetime let alone get to know the people there personally. I would have never met the older man at Hotel Cannon D'Oro in Conegliano, Italy who would call me at 10 PM to come down to the lobby to share a glass of Prosecco and talk about world politics. I would have never met the man at the Vivarini glass shop in Murano who took me on a personal tour of the most spectacular glass studio in the world. I may never have taken a trip to Paris and ride on the Seine River or go to the top of the Eiffel Tower. I may never have stayed at the Farm Inn outside of Johannesburg which included chickens and roosters outside my hotel room door at no extra charge. In retrospect, it was the birth of the global, creative part of my soul that needed to expand its boundaries. Birth is sometimes an ugly and painful process.

It's always darkest before the dawn, and I live to tell you that the dawn can be on the Grand Canal or the Seine River in Paris. Where in the world will your Dark Night of the Soul/Ego take you next? Instead of thinking about the worst that can happen, consider that it could be the best that can happen. Read Robert Ohotto's book Transforming Fate into Destiny to get some perspective on where you're heading next on your life's journey.

Copyright ©Robin Rousseau. All Rights Reserved.

Robin Rousseau reviews books and writes about inspirational topics on her website [http://www.explorebeyondtheusual.com]

Article Source: http://EzineArticles.com/?expert=Robin_Rousseau

backdating options | greg reyes

Options Backdating: Restatement: Meaning, Types, Impact

Had a good discussion with a few analysts (financial) and accounting on the question around differences between Restatement and Recertification of results - what are they, what is the difference etc.?

1. Restatement: It will effectively rewite a company’s books. Dr. Min Wu of New York Univ of Business has a great paper on Review of earnings restatement. Here are some highlights:

a) Restatements typically occur when a company, often in consultation with its auditors or the SEC, determines that the company’s financial statements contained either “errors” resulting from “mathematical mistakes, oversight, or misuse of facts at the time the financial statements were originally prepared,” or “accounting irregularities.” The dissertation focuses on these types of restatements. In reality, it can be hard to distinguish between intentional misstatements and misinterpreting the accounting rules.

b) There are several reasons for restatements. The first involves companies that prematurely recognize revenues, or, even worse, recognize fictitious revenues. Misstating costs or expenses is one of the most common ways of twisting current-year profits. Common techniques involve overstating inventory, overstating other long-term assets, underestimating or overestimating reserves, and shifting expenses from one period to another.

Restatement can involve SEC-filed annual reports (10Ks), which are audited, and possibly the quarterly reports (10Qs). It can also involve only the interim quarters of the current fiscal year.

http://blog.vangal.com

gregory reyes | options backdating

How Steve Jobs Personally Benefited from Options Backdating at Apple Computer

Apple Computer stock dropped recently after the San Francisco Recorder, a legal newspaper, said Federal prosecutors are examining Apple’s stock option documents to decide whether to file criminal charges. That was an escalation from the previous level of expectations. Some of the stock’s cheerleaders are saying it won’t hurt Apple or Steve Jobs, and there is not a chance he will be leaving Apple.

I think that’s wrong, or at least expresses a lot more certainty than any outsider could know. The other, quieter announcement was that Steve Jobs has “decided” that he needs to hire his own attorney to deal with the SEC and the Justice Department from now on. Up to now, he has been represented by the company’s outside law firm.

One of the big advantages of being in and around Silicon Valley for 25 years is the déjà vu effect. I have seen this before. CEOs usually don’t hire their own counsel until the company counsel tells them that the company’s interests and the CEO’s interests have diverged. In other words, if Apple’s counsel has seen enough to believe the company was hurt and the CEO was involved in it, they have the potential of representing the company in a lawsuit against the CEO, and therefore have to advise him that they can no longer represent him..

Now that the company has admitted Jobs knew about the backdating, I think the next announcement we will see is that Steve Jobs has been notified he is the target of a criminal investigation, and then the Board will have a very difficult time doing anything other than suspending him until the investigation is over.

I think these things because I have been through the numbers, including what I believe is the largest stock option grant ever, to Steve Jobs in January 2000.

Overall, since the current proxy disclosure rules started in 1994, Apple made 15 rounds of options grants through their September, 2002 fiscal year. If you look at the price of those grants compared to the annual range of the stock for the six months prior to the grant and the six months following the grant, all 15 should average somewhere around the 50th percentile of the annual range. Some grants made right before the stock declined would be in higher percentiles, while others made right before the stock shot up would be in lower percentiles. But averaging all 15 rounds together, it seems reasonable to expect the 50th percentile if no funny business was going on.

Apple’s grants average in the 15th or 16th percentile. That is powerful evidence that a company backdated, or at least granted options right before they had reason to believe the stock was going to jump. Of course, Apple has now admitted that they backdated options, and Jobs knew about it

There are three transactions the SEC and Justice Department probably are looking at for backdating. One was on July 11, 1997, when Apple repriced options and executives turned in old options with a $7.44 strike price for an equal number of new options with a $3.31 strike price. There were only two other days in the 1997 fiscal year when the stock closed at a lower price. On August 6, only 26 days after the repricing date, the stock jumped 33% and then added another 11% on August 7. The question is whether someone decided on August 8 that July 11 would have been a great day to make the repricing effective.

A second case was January 17, 2001, when four top officers (not including Jobs) got options totaling two million shares at $8.41 a share. A few months before, on the last business day of the 2000 fiscal year, September 29, AAPL was cut in half when they preannounced an earnings shortfall. It kept dropping to the $8.41 option price, and then staged a nearly 60% rally in four months.

The third and most serous case is the giant 40 million share (split-adjusted) grant at $21.80 a share to Jobs on January 12, 2000. This one is a bit tricky, as the company has said Jobs “didn’t benefit” because the stock eventually went below the option price. But here’s what really happened.

In the previous 26 trading days, AAPL fell 26%. Jobs then got his grant on the exact day the stock hit its low, and the stock rose 65% in the following 10 weeks. The issue, again, is whether someone decided in February or March that January 12 was a great day to price the boss’s options, it being the lowest price for many months. AAPL stock eventually went below the option price, and the options were cancelled. The company says due to “irregularities in the grants, the options were canceled and resulted in no financial gain to the CEO.”

Oh, really? This bunch of options would have expired in January 2010. Apple’s stock kept declining in the tech bear market, so the Board gave him 10-year options on another 15 million shares in October 2001. But the second batch went underwater, too, and on March 19, 2003, Jobs “voluntarily cancelled” all 55 million options. That’s why the company claims there was no financial benefit to him from the perfectly-timed 40 million share grant.

But the Board of Directors Compensation Committee report for that year disclosed that “in exchange for his cancelled options” Jobs was given 10 million split-adjusted shares worth around $75 million at the time. They were restricted from sale for three years, and when they became free to trade on March 19, 2006, they were worth $640 million. Not bad!

Here’s the rub, and I am indebted to compensation consultant Graef Crystal for doing the calculations. How did Apple’s Board decide on the number 10 million shares? Almost certainly, they used an options pricing model to calculate the current value of the options, which still had seven and eight years to expiration. Even though they were underwater on that day, the long time to expiration gave them value. Crystal used the Black-Scholes option pricing model to calculate the current value of the 55 million options: $77 million. That’s close enough to $75 million to believe this was their methodology.

But remember that the value of the options also depends on their strike price, and the very favorable strike price on the first 40 million grant raised their value quite a bit. If the strike prices of the two contracts had been set at the 50th percentile of the daily closing prices in their respective fiscal years, the calculated value on March 19, 2003 would have been $10 million less, around $67 million. So the Board might have given him, say, $65 million in shares instead of $75 million, or 8.7 million shares instead of 10 million. Those 8.7 million shares would have been worth $557 million when the sale restrictions expired on March 19, 2006, instead of $640 million. That’s an $83 million difference.

Yet in an October 4, 2006 filing with the SEC, Apple said: “In a few instances, Apple CEO Steve Jobs was aware that favorable grant dates had been selected, but he did not receive or otherwise benefit from these grants and was unaware of the accounting implications.” He didn’t receive the grants? He didn’t benefit from the grants? What about the $83 million? Get real.

It now appears that the paper trail around the October 2001 grant (7.5 million shares at the time; 15 million split-adjusted) was falsified. Recently, Apple has been saying that, yes, there was something wrong with the first and maybe both of these grants, but Jobs was not aware of the “irregularities.” But Jobs also was CEO of Pixar at the same time, which also appears to have backdated stock options. So he is the only CEO of two companies caught in this scandal, and it looks to me like someone on the East Coast has decided to teach the freewheeling entrepreneurs on the West Coast a little lesson by nailing a very big target. I still think there is a substantial risk that Jobs will be forced to leave Apple, and therefore it is too risky to step into the stock yet.

Michael Murphy, CFA, has been a technology stock analyst for over 35 years. He founded the first technology investing newsletter, the California Technology Stock Letter, in 1982. He now writes New World Investor, a weekly advisory letter, with more information available at [http://www.NewWorldInvestor.net].

Article Source: http://EzineArticles.com/?expert=Michael_Murphy

gregory reyes | options backdating