Bosses at iPod maker Apple have struck a preliminary deal to settle legal action brought by shareholders over the company’s stock option scheme.
Shareholders alleged that bosses, including chief executive Steve Jobs, had damaged the firm over their handling of Apple’s share options. As part of the settlement, insurers representing Apple executives will pay the computer maker $14m (£8m). The deal ends a series of lawsuits over the firm’s stock incentives.
Apple’s board has also agreed to reform part of its stock option plan. Caught out The action alleged that executives, including chief executive Steve Jobs, chief financial officer Peter Oppenheimer and the former chief financial officer Fred Anderson, had illegally backdated stock options. Backdating was a common practice among high-tech companies to boost pay and retain staff. The practice lowers the exercise price of a stock option, so when the options are cashed in employees reap greater profits. And it is not illegal, as long as the company audits the process correctly. Apple is the highest profile of more than 150 companies caught out by share option schemes granted at the height of the technology boom at the start of the decade. The Securities and Exchange Commission (SEC) launched an investigation into Apple’s stock options two years ago when the firm admitted it had backdated 6,428 sets of options between 1997 and 2002 – that included 7.5 million options for Mr Jobs. That forced Apple to restate 10 years of accounts and reduce its reported profits by $84m. The latest settlement closes the chapter on state and federal investigations into Apple’s share incentive scheme. Last month, a former lawyer at Apple agreed to pay $2.2m to settle charges that she altered records to hide illegally backdated options granted to Apple bosses, including Mr Jobs. The multi-million dollar settlement is set to get final approval on 31 October. Blames and Troubles with the Legends…