Filed under: Apple Corporate, Apple Financial, Steve Jobs, Bad Apple
Apple settles options backdating lawsuit
The Associated Press reports that Steve Jobs and other senior executives have settled a stockholder lawsuit claiming they mishandled stock option awards.
Insurers representing Jobs and Apple's board will pay Apple, Inc. $14 million, which tidily covers almost $9 million in attorney's fees and expenses. The settlement puts to rest a series of suits related to Apple's options backdating scandal.
Apple had no comment on the matter.
The settlement and the suit behind it is a little complicated: In a traditional stockholder lawsuit, the stockholders must prove that the stock price was negatively affected by the actions of the defendants. Since accounting problems that follow options-backdating scandals frequently don't affect stock price, the lawsuit is called a "derivative lawsuit."
In a derivative lawsuit, shareholders sue company leaders individually on behalf of the company, claiming they caused harm to the company's interests. The executives settled with Apple and its shareholders, offering the $14 million in exchange for dropping the suit. The money comes from the insurance companies, as the executives had policies in place to cover them in case they had to pay up. Got all that? There's a test at the end.
The settlement received preliminary approval in Federal district court on Monday. A final settlement hearing is scheduled for October 31.
[Via Valleywag.]
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Reader Comments (Page 1 of 1)
KosherSalt said 9:21PM on 9-10-2008
I wonder if Apple lawyers get iPods... because they've been really shuffling around lately. (ba dum chh)
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pt0ne said 9:54PM on 9-10-2008
I want a shirt like that
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Mike Scherer said 12:15AM on 9-11-2008
Count me in too. I want a shirt like that two.
No really, a two dollar bill version.
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Mike Scherer said 12:21AM on 9-11-2008
Or...
How about that shirt with a TUAW dollar bill?
Eh? See where this is going?
I'm not wrong to dream am I?
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Mac Diva said 5:05AM on 9-11-2008
Wrong. The reason the case is being settled for next to nothing is that under any available cause of action the petitioners would have had to prove actual harm to Apple Inc. No damage, no case. That was impossible, so these complaints were dismissed twice. Rephrasing the same claims again would have been equally useless. The respondents saved themselves additional legal costs defending themselves by settling, even if represented by in-house legal staff.
The only entities to profit from this tempest in a teapot were the petitioners' lawyers. The few million left over for Apple Inc. is too little to be meaningful.
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kali4 said 9:46AM on 9-11-2008
I don't know if I am reading this wrong and I would like some clarification.
"The money comes from the insurance companies, as the executives had policies in place to cover them in case they had to pay up."
Does this mean that the execs have insurance policies in place so that they can profit off of stock manipulations and not have to give the money back when they get caught?
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Mac Diva said 4:07AM on 9-13-2008
No. It means the executives have insurance to cover any civil legal exposure. Doesn't matter whether the allegations creating the exposure are substantive or not.
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