Apple settles stock-option backdating lawsuit

Thirteen execs, including CEO Steve Jobs, will pay $14M

By Grant Gross

September 11, 2008 12:00 PM ET

Comments

Top Stories

IDG News Service - CEO Steve Jobs and other Apple Inc. executives have settled a lawsuit alleging the company was harmed by its backdating of stock options to employees.

Jobs and 12 other Apple officials have agreed to pay $14 million to settle the lawsuit, plus nearly $8.9 million in attorney's fees and expenses. The settlement, approved Monday by Judge Jeremy Fogel of the U.S. District Court for the Northern District of California, also requires Apple's board of directors to create new rules for giving employees stock options and appoint a committee to oversee stock trading by employees.

Apple stockholders filed multiple lawsuits after Apple announced it had uncovered some options irregularities. Sixteen stockholder lawsuits were consolidated into one complaint in late 2006.

In a typical backdating scheme, a company grants stock to executives and employees and backdates the grants to correspond with lows in the stock price.

Apple conducted an internal investigation, which revealed that 6,428 stock-option grants had been improperly backdated between 1997 and 2002. The investigation found that Jobs was aware of the grants, but he did not financially benefit from any of them.

Apple took an additional after-tax charge against earnings of $84 million in 2006 to account for the options.

In April 2007, the U.S. Securities and Exchange Commission charged Nancy Heinen, the company's former general counsel, of fraudulently backdating stock options. The U.S. Department of Justice also looked into the options backdating at Apple, but closed the investigation in July without charging anyone.

Comment Recommend Digg Twitter ShareThis

Email Print Send Feedback Reprints

Reprinted with permission from

IDG.net
Story copyright 2009 International Data Group. All rights reserved.

Jump to comments

Apple

Additional Resources

Microsoft

DirectAccess and UAG: Better Together

Here are some of the key reasons why you would want to run Unified Access Gateway with DirectAccess.

Microsoft

Case Study: Energy Firm Tightens Protection, Simplifies IT Work

Review how one energy firm tightened protection and simplified IT work using business-ready security solutions.

Sybase

NEXT-GENERATION MOBILITY PLATFORMS

In this white paper, IDC analyzes the role of next-generation mobile enterprise platforms as organizations seek a more strategic deployment of mobile solutions.

Learn the important issues you must consider before starting your next mobility initiative. Get your mobility white paper from IDC now, compliments of Sybase.