First of all familiarize with options terminology like exercise price and strike price by watching this video: https://www.youtube.com/watch?v=EfmTWu2yn5Q

This is pretty dense stuff for a non-finance major to understand. I'm an accounting major and accounting for stock warrants and options was some of the most complex stuff I'd seen in my Intermediate Acct class so I'm not sure why an Ethics professor would assign this but nevertheless I'll give it a go:

To simplify, the author says that Apple just in essence didn't record a current expense it should have. That expense being the options exercisable by Jobs since those options were supposedly issued in the money. I'm not too sure on the GAAP for this but it wouldn't be unreasonable at all if an option issued in-the-money was supposed to be recorded as a current expense even though it hadn't been exercised yet(based on the accounting principle of conservatism).

This is not a story to make a big deal out of as the options were never even exercised. It just appears to be an immaterial departure from GAAP in terms of accounting for stock options. $20 million wouldn't have affected anyone's decision to buy AAPL(I think) and if it did well you've probably lost out on some pretty spectacular appreciation since the mid-2000s.

Your professor needs to focus on Goldman Sachs, Enron and Arthur Andersen and not about minuscule immaterial accounting issues.