Apple, Jobs Settle Backdating Lawsuits
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LOS ANGELES -- A federal judge in San Jose has given preliminary approval to a $14 million settlement of shareholder claims over backdating of stock options against current and former Apple (NASDAQ: AAPL) executives, court documents showed.
The current and former executives and directors, including Chief Executive Steve Jobs, agreed to the settlement.
As part of the deal, Apple's liability insurer agreed to pay the company $14 million, the court document said.
The deal also includes the insuring company's payment of nearly $9 million in fees and expenses to lawyers who brought the state and federal actions that were later consolidated.
U.S. District Judge Jeremy Fogel gave preliminary approval to the proposal and set a hearing for October 31 to finalize it.
Apple had no comment on the proposed settlement on Wednesday.
The shareholders' attorney could not be reached for comment.
Such shareholder derivative actions are brought by shareholders on behalf of a corporation, generally against officers and directors accused of harming the company or breaching their fiduciary duty to shareholders.
Under the proposed settlement, Apple agreed to implement certain corporate governance reforms and modify its existing process for granting and documenting stock options and other equity awards.
The shareholder actions, filed in 2006, accused Apple executives and directors of breaches of fiduciary duty, corporate waste, unjust enrichment and violations of state and federal laws related to alleged stock options backdating.
The lawsuits, which at one time numbered 21 in state and federal courts, followed Apple's disclosure in 2006 that it had discovered irregularities related to stock options grants made between 1997 and 2001, and had to take an $84 million charge.
The defendants included Jobs, former Chief Financial Officer Fred Anderson, former General Counsel Nancy Heinen, Chief Financial Officer Peter Oppenheimer, Chief Operating Officer Timothy Cook, Senior Vice President Ronald Johnson, former executives Avadis Tevanian, Mitchell Mandich and Jonathan Rubinstein, and board members William Campbell, Millard Drexler, Arthur Levinson and Jerome York.
All of the defendants agreed to the settlement, according to court documents.