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????The story of that grant opens in late 2000, a panicky time for Apple. Silicon Valley was reeling from the dot-com crash. Apple had missed its quarterly numbers, and after a big run-up in the company's stock (multiplying the company's market cap from $2 billion to $16 billion), Apple's market value had melted back down to $5 billion. Jobs feared that his inner circle was ripe for poaching.

????In October 2000, Jobs started talking to the directors about giving the executive team a big grant to place them in golden handcuffs. At the time - for 15 months, in fact - Apple's board had no compensation committee providing oversight over the CEO's grant practices, an extremely unusual situation. (Almost 99% of public companies at the time had compensation committees, according to a study by the research firm ISS, a unit of RiskMetrics.)

????In late 2000, Jobs told at least one of his top lieutenants to expect the options to be priced on Jan. 2, 2001. But at the end of January, Jobs was still consulting with Heinen about the grant. The stock had been climbing that month, which meant that options would have a higher exercise price than if they had been granted on Jan. 2.

????On Jan. 30, 2001, according to the SEC's suit, Heinen e-mailed Jobs with a list of possible retroactive dates for the grant; Anderson got the list too. The goal was to get the executive team a price almost as low as the close on Jan. 2. (Heinen thought that using the original date might draw public criticism for springloading because Apple stock had jumped just a few days later on product announcements by Jobs at Macworld.)

????Jobs picked Jan. 17 for the executive team grant, a date when Apple shares still had a nice low closing price. According to the SEC suit, Heinen instructed a staff attorney, Wendy Howell, to prepare a "unanimous written consent" (UWC) for the signature of Apple board members, retroactively approving the options with "an effective date of Jan. 17, 2001, priced at [$8.41]." (All share prices and numbers of options in this story are adjusted for subsequent splits in Apple stock.)

????The board members didn't fax back the signed papers for the executive-team stock-options grant until Feb. 7 - which, in the SEC's view, made that the proper grant date. By then, Apple stock was up 23% over the Jan. 17 grant price. This meant each of the six executives receiving options got a paper windfall of either $1.6 million or $3.9 million, depending on the size of their grant. According to the SEC, it also meant Apple had engaged in illegal backdating, awarding in-the-money options without disclosing it and inflating company earnings by failing to record the $18.9 million expense on its financial statements.

????Apple directors, like the company, refused to make any public comment for this story. But in response to shareholder lawsuits, Apple's lawyers argued that the directors routinely signed UWCs giving perfunctory approval to option grants they'd effectively delegated to management. Similarly, the lawyers argued, Jobs had no reason to think there was a problem, because his CFO and general counsel had signed off on the grant.

????As a condition of taking over in 1997, Jobs had fired most of Apple's board, installing a new one with just six members. Only two directors were holdovers: Edgar Woolard, the retired DuPont chairman, and Gareth Chang, senior vice president of Hughes Electronics. The others were Oracle (ORCL, Fortune 500) CEO Larry Ellison, a close friend of Jobs; Intuit CEO Bill Campbell, who had worked at Apple back in the 1980s and was Jobs' neighbor; Jerry York, a former CFO of IBM and Chrysler, who later became CEO of Micro Warehouse, a computer reseller that did extensive business with Apple; and Jobs himself.

????Apple's board has drawn criticism from governance experts for years. In his 2002 book, "Take On the Street," former SEC chairman Arthur Levitt complained that Apple's governing body simply failed to meet "good governance litmus tests." Levitt wrote, "It's plain to me that Apple's board is not designed to act independently of the CEO." A self-described "Apple junkie," Levitt had actually been invited by Jobs to become an Apple director in February 2001 - only to be "disinvited" after returning from a visit to Silicon Valley. "Arthur, I don't think you'd be happy on our board and I think it best if we not invite you," Levitt recounts Jobs telling him in a phone call. Levitt says Jobs explained that he had come to this conclusion after reading a Levitt speech on corporate governance. "Frankly, I think some of the issues you raised, while appropriate for some companies, really don't apply to Apple's culture," Jobs told him. Levitt says he was "floored."

????No question, Apple's culture at this level was out of the ordinary. Jobs accepted a salary of $1 a year. In January 2000, after the stock had soared and the company's survival seemed assured, Apple announced that it was buying Jobs a jet - not a corporate jet for him to use, mind you, but his own Gulfstream V. Total cost to the company, including Jobs' taxes on the gift: $88 million. While the plane has long been cast as a board's creative gesture of gratitude, Woolard says Jobs is the one who thought of it. "He brought up the idea: 'What I really need is a plane where I can take my family to Hawaii on vacation, go to the East Coast.' I said, 'All right.'" Larry Ellison declared, "With what he's done, we ought to give him five airplanes!" Jobs also got a mega-grant of 40 million options - almost 6% of the company, priced at $21.80 a share. Half would vest immediately, the rest within 18 months. That was unusual, but the board reasoned that it should make up for the 30 months when Jobs had worked for a buck a year.