NewsDude
09-12-2008, 04:01 PM
Apple Inc. CEO Steve Jobs and several other senior executives and board members have agreed to settle a lawsuit that claimed the company was damaged by their role in Apple's mishandling of stock option awards.
Because of the structure of the lawsuit, insurers representing Apple's directors and officers will pay the iPod and Macintosh maker $14 million. The settlement is designed to repair damage to Apple that the shareholders, who are suing on behalf of the company and not themselves, claimed the company suffered because of the stock options tampering.
Apple, however, is on the hook for $8.5 million in plaintiffs' attorneys' fees and $350,000 in expenses, according to a filing in U.S. District Court in San Jose, Calif. Apple's board must also adopt several reforms related to stock option grants.
Apple spokeswoman Susan Lundgren said the company had no comment.
The so-called "derivative lawsuit" -- in which shareholders sue executives or board members over claims that their actions harmed the company as a whole -- has became a popular tool in stock options cases.
Unlike traditional shareholder lawsuits, which usually require evidence that investors were harmed, the accounting problems that follow options-backdating revelations often do little damage to a company's stock. That's partly because many investors don't include options expenses in their measurements of a company's profitability.
In this case, Apple was considered a "nominal defendant" because it had to defend the executives being accused of malfeasance -- but derivative cases are unique because any settlement amount winds up going back to the company.
Espen Eckbo, the founding director of the Lindauer Center for Corporate Governance at the Tuck School of Business at Dartmouth College, said a derivative suit may be able to "force changes that otherwise might not have happened inside the firm." He noted, though, that he doesn't think this was the case here.
The...
More... (http://www.toptechnews.com/story.xhtml?story_id=61821)
Because of the structure of the lawsuit, insurers representing Apple's directors and officers will pay the iPod and Macintosh maker $14 million. The settlement is designed to repair damage to Apple that the shareholders, who are suing on behalf of the company and not themselves, claimed the company suffered because of the stock options tampering.
Apple, however, is on the hook for $8.5 million in plaintiffs' attorneys' fees and $350,000 in expenses, according to a filing in U.S. District Court in San Jose, Calif. Apple's board must also adopt several reforms related to stock option grants.
Apple spokeswoman Susan Lundgren said the company had no comment.
The so-called "derivative lawsuit" -- in which shareholders sue executives or board members over claims that their actions harmed the company as a whole -- has became a popular tool in stock options cases.
Unlike traditional shareholder lawsuits, which usually require evidence that investors were harmed, the accounting problems that follow options-backdating revelations often do little damage to a company's stock. That's partly because many investors don't include options expenses in their measurements of a company's profitability.
In this case, Apple was considered a "nominal defendant" because it had to defend the executives being accused of malfeasance -- but derivative cases are unique because any settlement amount winds up going back to the company.
Espen Eckbo, the founding director of the Lindauer Center for Corporate Governance at the Tuck School of Business at Dartmouth College, said a derivative suit may be able to "force changes that otherwise might not have happened inside the firm." He noted, though, that he doesn't think this was the case here.
The...
More... (http://www.toptechnews.com/story.xhtml?story_id=61821)