Former Apple Exec Settles Backdating Suit for $2.2 Million
Date : 14 Aug 2008 Category : Technology
NewsFactor NetworkThe Securities and Exchange Commission also barred her from practicing security law for three years. Among the recipients of backdated options was Apple CEO Steve Jobs.
What Happened
Options with an earlier date can vest more quickly and have greater value relative to a company's current stock price. The option price is the actual price of shares on the grant date. So backdated options were worth far more than if the price had been set after Apple's stock rose.
Some financial estimates place the loss to shareholders at close to $40 million. An Apple internal investigation and audit absolved most of the executive suite, except Heinen and former Chief Financial Officer Fred Anderson. SEC investigators agreed that no other Apple executives were at fault.
Anderson settled with the SEC shortly after the charges were filed in April 2007. In his defense, Anderson says he warned Jobs about the illegal backdating but was assured it had been approved by the board of directors.
Backdating is not illegal if it is publicly disclosed, properly documented in financial records, and approved by the board of directors. The SEC found that Heinen may have tampered with documents and created documents to make it appear that the board had approved the backdating.
The charges stem from Heinen allegedly backdating 4.8 million shares of stock to February 2001 for herself and other top executives and more than seven million shares for Steve Jobs to December 2001.
No Admission of Guilt
Heinen wasn't required to admit guilt in the settlement. Her attorney, Miles Ehrlich, said, "This isn't an admission -- it's...