San Francisco - Apple has agreed to a 14-million-dollar
settlement of a shareholder lawsuit that alleged chief executive
Steve Jobs and other executives had harmed the company by backdating
employee stock options, court papers showed Tuesday.
The settlement won preliminary approval Monday by Judge Jeremy
Fogel of the US District Court in San Jose, California. It requires
Apple to also pay 8.9 million dollars in lawyers' fees, create new
rules for giving employees stock options and appoint a committee to
oversee stock trading by employees.
Stock options are a widespread form of compensation in US high
tech firms. They give employees options to buy shares at different
strike prices, which can translate into huge profits if the share
price rises. The scheme is designed to provide incentives for workers
to help the company, but Apple rigged the system to guarantee profits
by backdating 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. That forced
Apple to restate 10 years of accounts and reduce its reported profits
by 84 million dollars.
The shareholder lawsuits were filed in 2006 and accused Apple
executives of a breach of fiduciary duty, corporate waste, unjust
enrichment and violations of state and federal laws related to
alleged stock options backdating.
USA
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