Jobs & Co. settle pool of backdating lawsuits for $14 million
Apple chief executive Steve Jobs, along with members of his current and former management team, have agreed to a settlement that will bring closure to nearly 20 investor derivative lawsuits over backdated stock options.
Among the executives listed as defendants where chief executive Steve Jobs, former chief financial officer Fred D. Anderson and chief financial officer Peter Oppenheimer; chief operating officer Timothy D. Cook; former general counsel Nancy Heinen; senior vice president Ronald B. Johnson.
Former senior vice presidents Mitchell Mandich, Jonathan Rubinstein and Avadis Tevanian Jr where also named as defendants, as were board members William V. Campbell, Millard S. Drexler, Arthur D. Levinson and Jerome B. York.
Although the Apple officers denied any wrongdoing, they acknowledged that proceeding with the litigation would "impose extensive and unrecoverable costs in the form of attorneysâ fees and expenses." The plaintiffs in the case agreed and, while maintaining the merits of their case, said the resolution "provides an excellent monetary recovery."
The settlement, which is due for final approval at an October 31st hearing, will bring to a close 14 derivative federal suits and 5 state derivative complaints brought against members of the Cupertino-based company's current and former leadership.
Derivative lawsuits are those filed by shareholders on behalf of the corporation, where the corporation and shareholders team to charge officers who allegedly caused harm to the company as a whole. If successful, proceeds from these litigations are awarded to the company, not the individual plaintiffs.
The 19 derivatives suits stemmed from irregularities discovered in option grants to Apple officers between 1997 to 2002, which ultimately forced the company to incur expenses of $84 million in non-cash stock-based compensation.
An internal investigation by Apple into the matter found that none of the company's current officers were guilty of any wrongdoing, but did raise serious concerns regarding the actions of two former officers in connection with the accounting for those misdated options.
Those two officers, former chief financial officer Fred Anderson and former general counsel Nancy Heinen, where both charged at the federal level by the Securities and Exchange Commission. Anderson settled with the Commission last April when he agreed to disgorge $3.5 million and pay a fine of $150,000. Heinen last month cleared charges brought against her when she accepted a series of sanctions and agreed to pay $2.2 million.