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When Apple Inc. tried to hammer out a new compensation agreement for iconic CEO Steve Jobs in 2001 � an agreement now being probed by federal prosecutors � the company called on Larry Sonsini, the lead partner at Wilson Sonsini Goodrich & Rosati. People with knowledge of the federal probe say the lawyer � an expert on corporate governance � was consulted by Apple’s board and legal department on a 7.5 million-share grant that’s become the core of the criminal probe by the Securities and Exchange Commission and San Francisco U.S. attorney’s office. Investigators have focused on the grant because a set of falsified meeting minutes was drawn up to make it appear as though the options were granted at an earlier date � and a more favorable price � than when the deal was actually finalized. The minutes were fabricated by a low-ranking in-house Apple lawyer, though prosecutors also have been looking over her head � at ex-GC Nancy Heinen and Apple’s former CFO, Fred Anderson. According to people with knowledge of the investigation, Heinen discussed the options award with Sonsini between its approval by the company’s board of directors and her department’s completion of the paperwork. Through a spokesperson, Sonsini declined to comment Wednesday, and people familiar with the probe wouldn’t discuss what he told the lawyers at Quinn Emanuel Urquhart Oliver & Hedges who conducted Apple’s internal investigation. It’s unclear how much Sonsini knew about the grant, including how it was accounted for. But for the second time in less than a year, a high-profile Valley scandal may turn on questions about the advice Sonsini did � or didn’t � give. Just as in the Hewlett-Packard boardroom spying scandal, company officials may point to Sonsini’s counsel to explain or defend their actions. Heinen, for example, is in a position to argue that her department’s role in the problematic award came on orders from the board of directors � and perhaps Sonsini. Such a defense would be a logical one for someone in Heinen’s position, said Peter Henning, professor at Wayne State University Law School and an expert on white-collar crime. Blaming input from Sonsini and Apple’s board could dissipate blame that might otherwise fall on Heinen’s shoulders. She could argue, Henning speculated, that “‘I didn’t intend to defraud or intend to violate any of the accounting rules because I was told this by the outside lawyer.’” STEVE NEEDED TO GET PAID Jobs’ compensation was a prickly issue for Apple in 2000. Since he rejoined the floundering company as a director and interim CEO in 1997, Jobs had received only his $1 a year salary. The rest of the company’s directors received option grants, but Jobs, a company employee, was ineligible. After Jobs decided at the end of 1999 to remain as chief executive, the board formed a special CEO compensation committee to award him a big chunk of options. In January 2000, that award was finalized as a 10,000,000-share grant, but a year later, Apple’s sinking share price had killed the value of those options. Jobs and the board discussed ways to work out a new, lucrative package.
Apple’s Jam

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