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.