updated 04:15 pm EDT, Wed September 10, 2008
Apple settles options suit
One chapter is coming to an end in ongoing legal battles Apple executives have been fighting over backdated stock options. Pending approval at a hearing in October, the defendants will settle 14 federal and 5 state cases for $14 million, plus attorneys' fees and other costs, creating a total settlement package worth nearly $23 million. The source of the trouble regards the misreporting of backdated options grants between 1997 and 2002, which has in various forms cost Apple at least $84 million.
The list of defendants has at times included CEO Steve Jobs, former CFO Fred Anderson, CFO Peter Oppenheimer, COO Timothy Cook, ex-general counsel Nancy Heinen, senior VP Ronald Johnson, and former senior VPs Mitchell Mandich, Jonathan Rubinstein and Avadis Tevanian Jr.; board members William Campbell, Millard Drexler, Arthur Levinson and Jerome York have also been involved.
Although Jobs was a defendant in the cases, he has largely avoided the blame.
Apple claimed he had been aware of some backdating, but did not exercise the options and was unaware of the legality issues. The two major players, prosecuted by the SEC, were former officers Heinen and Anderson, who last month were forced to pay $2.2 million and $3.5 million, respectively.
Apple still argued that the case did not have any substance, saying "most of the grants cited in the federal complaint could not give rise to recoverable damages because they were not misdated or the grants were cancelled before they were exercise, thereby providing no benefit for the grant recipient and imposing no loss on the Company." The settlement was agreed upon to avoid the potential expenses of the legal battle.