Apple Board Fuming at Steve Jobs

Business

John Eckhouse
The San Francisco Chronicle

September 17, 1985

Apple Computer's board plans to meet - perhaps as soon as the end of the week - to talk about reining in, deposing or possibly even suing chairman Steve Jobs.

Sources said Apple President John Sculley and other senior executives were ``extremely upset'' and several board members ``completely taken aback'' at Jobs' disclosure Friday that he plans to hire away five Apple managers as employees of an educational computer firm he intends to start.

The board of the Cupertino computer maker is expected to take swift and strong action. Earlier this year, it backed Sculley in a boardroom battle that stripped Jobs of his day-to-day management responsibilities.

One source said the board felt double-crossed by Jobs, who only last Thursday told directors that his new company would not compete with Apple and that he would not take any key employees with him to his new venture. The board, in a sign of rapprochement, even talked of making a minor investment in Jobs' as yet unnamed company.

``Now investment is not the issue; the issue is Steve Jobs as chairman of this company and five managers going with him from Apple,'' said Apple spokeswoman Barbara Krause.

Steve Wozniak, who along with Jobs started Apple in a garage nine years ago, found some ironic humor in his co-founder's predicament. When Wozniak left Apple to start a new company in February, Jobs threatened to take Apple's business away from an industrial design firm unless it dropped Wozniak's CL9 firm as a client.

``He said on the phone that Apple will stomp on anything that competes with Apple,'' Wozniak said yesterday in a brief interview. ``I wonder if Jobs will apply that now or is he going to be very hypocritical? I look forward to a great product and I wish him success, but his integrity I cannot trust.''

Krause declined to say what actions the company and the board are considering, but attorneys say there are sufficient grounds for a lawsuit.

``It's obviously a conflict to be hiring people away from a company of which you are still chairman,'' said Richard Keatinge, partner in charge of the Los Angeles office of Reavis & McGrath, a leading corporate law firm. ``He also could be subject to ouster as chairman for violating fiduciary duties if he used his inside knowledge to the detriment of the company.''

Robert Spanner, a Palo Alto attorney, said the critical issue is whether Jobs' new company is in any way competitive with Apple. Spanner said the state Supreme Court has ruled that supplying information about employees to a competitor in order to permit it to recruit the individuals constitutes a breach of fiduciary duty.

``As a political matter he may well be forced off the board, but I don't think it's a legal issue if he handles it properly,'' said a Peninsula lawyer who asked not to be identified.

Jobs, Apple's largest shareholder, has spent little time at Apple since losing the power struggle with Sculley. Meanwhile, he has sold much of his stock.

PHOTO; Caption: APPLE CHAIRMAN JOBS / He could be deposed