Apple agrees to pay itself $14m
Settles backdating lawsuits (almost)
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Apple has agreed to pay itself $14m in order to settle shareholder lawsuits over improperly backdated stock options awards.
A preliminary settlement, approved Monday by Judge Jeremy Fogel in US District Court for Northern California, will end 19 separate derivative lawsuits filed by Apple shareholders against Apple's top executives and board members.
Defendants named in the 14 state and five federal cases include CEO Steve Jobs, former CFO Fred Anderson, former general Counsel Nancy Heinen, current CFO Peter Oppenheimer and others.
A derivative lawsuit is typically initiated by a shareholder on behalf of the company. Proceeds of a successful action are usually rewarded to the company, rather than the individual.
Attempts by shareholders to sue on their own behalf have thus far been unsuccessful. Particularly in light of Apple having offered cash payments to make up for the shortfall and the stock price having risen since the backdating scandal was uncovered in late 2006.
Under Apple's proposed settlement, $14m will be paid to Apple – not by the officers and directors themselves, but by their liability insurers. Apple said in a court filing that the sum represents a "substantial percentage" of the maximum possible recovery Apple would have received if the plaintiffs prevailed on their claims. Apple also agreed to pay a total of $8.85m to federal and state attorneys representing the plaintiffs.
If it passes final muster, the settlement will end the derivative cases that accuses Apple brass of hurting the company by knowingly altering the dates of when stock option grants were awarded to executives so that they appeared to have been given when the price was at a low. Backdating isn't illegal in itself – but the practice needs to be divulged to the US Securities and Exchange Commission or things get sticky.
Apple already received a rap on its chamber the door from government regulators, and duly admitted it incorrectly accounted for share options.
After an internal investigation, the company blamed ex-financial chief Fred Anderson and ex-general council Nancy Heinen for the trouble. Anderson settled with the SEC for $3.5m without admitting wrongdoing, and Heinen paid $2.2m just last month for a similar arrangement. ®
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COMMENTS
So let me get this right?
If I take out liability insurance and then sue myself for falsely saying that Apple is the greatest company ever, then I can make money off that?
SWEET Where do I sign up?
*sings* America America..........
I hate this country sometimes.
/Mines the orange one with Guantanamo Detainee on the back
Paging WB Paging WB
Helps needed on the comment section. Webster please report for comment during in Apple comments.
That is all
Apple's not paying itself
It's the officers of the company (Steve Jobs et al) in their position as officers who are paying to compensate the company (Apple) for having done the options accounting slightly wrong to the supposed detriment of the company.
The officers of the company are claiming on their professional indemnity insurance to pay the settlement to the company.
Lawyers dig up a couple of shareholders (and for all I know get someone to slip them a few thousand dollars) to be "plaintiffs" they can act for, in the hopes of collecting their juicy fees ($8.5M) from Apple if it al works out.
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