Wednesday, October 06, 2010, 04:35 pm PT (07:35 pm ET)
Apple settles backdating class-action lawsuit for $16.5MThe lead plaintiff for the class-action lawsuit against Apple for alleged stock-option backdating announced that a settlement of $16.5 million has been reached.
New York City Corporation Counsel Michael Cardozo issued the statement Wednesday on behalf of the New York City Employees' Retirement System, MarketWatch reports.
In the settlement, Apple committed to distributing $14 million to shareholders, contributing $2.5 million to corporate-governance programs at law schools and establishing "key corporate-governance reforms at the company."
In order to implement the reforms, Apple will examine clawback provisions for executive-compensation grants and revise its insider-trading policy to "provide enhanced compliance requirements," Cardozo said. The Cupertino, Calif., company is also responsible for an additional $4 million in attorneys' fees.
Apple has already been investigated by the Securities & Exchange Commission regarding the options backdating. In 2007, Apple's former chief financial officer Fred Anderson repaid $3.5 million in stock options gains and paid a fine of $150,00. In 2008, former Apple general counsel Nancy Heinen accepted sanctions and agreed to pay $2.2 million in a settlement with the SEC. Anderson and Heinen settled with the understanding that they weren't admitting any wrongdoing.
At issue are several options grants to Apple executives in 2001. In December 2000, Apple Chief Executive Jobs approved an options grant for Apple's top executives, but the grant wasn't finalized until Jan. 31. When it was revealed that the stock options were dated for Jan. 17, Apple was accused to backdating the options to take advantage of a lower stock price. Heinen was also investigated for allegedly falsifying minutes for a non-existent board meeting to approve a December 2001 grant to Jobs.
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