RSSApple tries to put options scandal behind it with settlement
By Ed Oswald | Published September 11, 2008, 2:19 PM
A shareholder lawsuit accusing Apple and its executives of improper accounting as a result of its stock options practices will yield a $14 million payout to the plaintiffs.
As a result of a settlement in a shareholders' derivative action, liability insurers will pay Apple a total of $14 million, effectively restoring to the company -- and, in the "derivative," to its shareholders -- what executives of the company allegedly took for themselves through options backdating practices.
Apple has also agreed to make some changes to the way it operates its business. It will also be responsible for $8.5 million in attorney fees and $350,000 in expenses, according to a September 4 filing with the US District Court in San Jose, Calif.
The settlement is expected to be finalized October 31 when the two sides are scheduled to meet in a hearing. Neither the plaintiff's attorneys nor Apple are responding to requests for comment.
Executives are also being permitted to deny any wrongdoing as part of the suit, customary in many pre-trial settlements. It will also settle much of the remaining legal claims over the stock options scandal that plagued the company for much of 2006.
Only two Apple executives were ever charged with any wrongdoing as part of the scandal. Former Chief Financial Officer Fred Anderson settled in April 2007 for $3.5 million, and former chief counsel Nancy Heinen settled in August for $2.2 million. Neither admitted any misconduct.
In layperson's terms, a derivative action is taken by a shareholder of a company on behalf of the company itself. These suits are commonly brought against the executives of the company. In such instances, any monies won do not go back to the person(s) initiating the suit, but rather the company in which they've invested.
I can't hear you, internetworld7. :)
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Whomever acted illegally should be held accountable.
Now, one wonders if the even more sordid tale of Dell is going to be told here as well?
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