Apple and stock option backdating
The lower this “strike price” is, the cheaper the executive can buy the stock.
When these options “vest” after a period of time, the executive can sell them at the new share price.
All that changes is how you have to account for having done so. You can issue options that are "at the money", which would be .10.
In 2001 he was granted stock options amounting to 7.5 million Apple shares, allegedly without the required authorisation from the company's board of directors.
That somewhere being the profits (increase expenses, you reduce profits, fairly naturally).
So, what should have happened is that Apple reported profits which were million lower for that quarter: they didn't, and that is the much larger problem.
Yes, of course, there's much more that can be said about Jobs and my Forbes colleagues are saying all of it over here.
I just want to explore this little part of the much larger subject: mainly because this is a corner of the subject I can actually add something to.