Sep 11, 2008, 17:40 GMT
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.
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