“Life for Apple’s lawyers became even busier this week after a fourth lawsuit over stock options allegedly granted on the wrong dates was filed,” Colin Barker reports for ZDNet UK.
Barker reports, “On Tuesday, lawyers acting on behalf of Apple shareholders filed actions against the company claiming that it ‘manipulated options grants to sell more than US$1 billion in company stock,’ according to Bloomberg News.”
“At least three other actions along similar lines have already been placed in U.S. courts. The lawsuits all claim that the company’s chief executive, Steve Jobs, and other executives backdated their share options, and later cashed them in shortly before Apple’s stock price fell,” Barker reports.
Full article here.
Related articles:
How options-backdating irregularities can affect your Apple Computer stock – August 23, 2006
Apple’s options imbroglio: Mac-maker granted options at or near key events in company’s history – August 18, 2006
Apple added to Nasdaq’s list of ‘delinquent companies’ – August 18, 2006
Apple unlikely to be delisted by NASDAQ – August 16, 2006
Apple CEO Steve Jobs drawn into stock options scandal – August 15, 2006
Apple announces update regarding stock option grants – August 11, 2006
As expected, Apple delays quarterly results due to stock-options grants review – August 11, 2006
Some stock options grant decisions were made by Apple board, and potentially, CEO Steve Jobs – August 10, 2006
Disney: no material impact from Pixar options – August 09, 2006
Pixar options draw scrutiny – August 08, 2006
Apple stock options scandal? What scandal? – August 07, 2006
Class action lawsuit over stock options filed against Apple Computer, Inc. – August 04, 2006
Wall Street forgiving of Apple’s stock option irregularities; CEO Jobs unlikely to be terminated – August 04, 2006
Apple’s stock option irregularities escalate into a scandal as world awaits Steve Jobs’ WWDC keynote – August 04, 2006
Apple warns of profit restatement dating back to 2002 – August 04, 2006
Apple loses 3.5% to $67.15 in premarket trading – August 04, 2006
Apple announces update regarding stock option grants – August 03, 2006
Shareholder’s options suit against Apple alleges ‘striking pattern that could not have been chance’ – July 11, 2006
Apple announces update regarding stock option grants – July 05, 2006
UBS: stock options probe unlikely to hurt Apple – June 30, 2006
Apple joins growing list of companies entangled in stock option ‘irregularities’ – June 29, 2006
Apple to investigate stock option grant ‘irregularities’ made between 1997 and 2001 – June 29, 2006
Throw all these bums in jail.
Yeah. I’m sick to death that I only made a 350% gain.
Let me at ’em… Let me at ’em!!!
Time to sell up and give the money back to shareholders.
There are WAAAAAAY too many $%@%^!*@#*@(#^%! lawyers in this g-damned country.
Cue all the “Steve Jobs is going to “fry” jokes
NO WONDER CREATIVE GOT WELFARE.
“The point is, ladies and gentleman, that greed — for lack of a better word — is good.
Greed is right. Greed works.
Greed clarifies, cuts through, and captures the essence of the evolutionary spirit.
Greed, in all of its forms — greed for life, for money, for love, knowledge — has marked the upward surge of mankind.” – Gordon Gekko
I once got a purple nurple from Here it comes!!
Given that no one really knows anything about the nature of the options handling, I think the lawsuit could be more properly described as “class action trial lawyers jump to reap tens of millions, shareholders to get pennies for their troubles.” That’s the only thing certain about this story.
I noticed this trend through the early 2000s, on how big name executives would sell their stock before it fell in price. Seemed kind of fishy to me at the time.
Executives of publicly traded companies are prohibited from selling stock during certain periods of the year.
Backdating stock options is one thing, selling stock just before the stock goes down in value is something else.
Done together and timed correctly, the executive can make a pretty penny, though in Apple’s case certainly not a Billion dollars in profits (not stock value), even over years of the practice.
Companies backdated stock options because it provided a good incentive as well as a bonus for executives who’d worked hard, but the stock had not necessarily gone high enough to provide a sufficient reward.
Selling stock shortly before the stock’s value goes down is a time honored practice. Executives have a measure of inside knowledge on how the company is doing, though that alone is certainly not indicative of how a stock will fare over time.
Still, this is a messy situation for Jobs & Company (and many others).
What’s sad is that Bill Gates, the “If I Only Had A Dime For Every Blue Screen of Death in Windows” executive, profited immensely by owning stock and running a criminal company.
Yeah, I’m sure pi$$ed about only making 350% on my money.
Lawyers are vultures (by and large).
Backdating stock options is one thing, selling stock just before the stock goes down in value is something else.
The alledged financial loss to shareholders is a red herring.
Since January 2005, for each $1 earned through options grants, shareholders received $25 in stock appreciation. The ratio just grows the further back you go.
If 10% of the value fo those grants resulted from backdating, it cost shareholders practically nothing.
You watch, the lawyers will make millions in the sutis, and their clients will get coupons good for products.
Jobs cancelled his stock in question – never cashed in on it.
macornancer and r – maybe you should be pissed that you didn´t make 500% on your money.
“The alledged financial loss to shareholders is a red herring.”
Yep, Apple execs steal from you and you don’t care. What would they need to do? Boil and eat your first born child?
Backdating options is perfectly legal IF you account for it properly rather than PRETENDING you issued them on that date.
Just like Bill Clinton didn’t get indicted for getting a blowjob, but for LYING about it, these guys are not in trouble for the underlying practice, but for LYING (in the company financial statements) about it.
“If 10% of the value fo those grants resulted from backdating, it cost shareholders practically nothing.”
As for the price difference, using Apple’s numbers for last year, if I issue an option, good for 2 years at the 52 week low price, on the that the stock is at it’s 52 week high, it’s worth $45 on that day rather than $11. That’s 400% of declared value they’d run off with, not an extra 10%
You must also realize that in exercising that option, Apple execs also get a piece of the appreciation YOU as a shareholder would otherwise have got. That’s just the way stock option compensation works, nothing illegal there.
“Jobs cancelled his stock in question – never cashed in on it.”
He “Traded” them for preferred stock. Still made money from them.
I’ll go with the blood sucking lawyer meme. They are vampires.
Yes it is true that the executives picked the pockets of us stockholders, but now the lawyers want a far larger part of the action. The executives stole pennies, but the lawyers are after dollars. The SEC should act to protect the rights of stockholders from the threat of theft and give priority to protecting against the biggest thieves, the lawyers.
“The SEC should act to protect the rights of stockholders from the threat of theft and give priority to protecting against the biggest thieves, the lawyers.”
Who’s hiring the lawyers? That’s right: Stockholders.
Blame the stockholders who pissed off because their pockets have been picked, not the lawyers.
Frankly I’d still prefer to see companies and executives punished by having to pay out money even if I never saw a penny of damages. It helps keep people honest.
A person who continues to hold stock of a company AFTER they know the executives have falsified fincial records and lied to them doesn’t need SEC protection.
Either they know what the potential consequences for the stock price are, and that ultimately they will be paying for any damages award, yet still beleive in the company or they need a brain transplant.
“On Tuesday, lawyers acting on behalf of Apple shareholders filed actions against the company claiming that it ‘manipulated options grants to sell more than US$1 billion in company stock,’
As an Apple share holder I applaud their actions!
Sometimes corporate execs get so full of themselves they think they are above the law and can do anything they want.
Because presumably it would have been better to have the shares languishing at $25, pre-split, with a lazy, complacent management team.
What people don’t seem to understand is that these types of class-action lawsuits – in fact, any kind of extraordinary activity including mergers and takeovers – inevitably consume management resources and cause a lack of focus. That loss of focus can often lead to fallow periods of product or service development or improvement, which – in turn – leads to a blip in financial results and a loss of share value.
As an example, you could look at HP when it was acquiring (or merging) with Compaq: the result was six to nine months of no improvement in several product lines including Proliant (at the time, the king of the server hill).
So these idiots – who are probably fscking day-traders who measure ROI over a week – are actually damaging the interests of long-term investors who can afford to take a long-term view and will understand that, even when restated, the effect on AAPL’s medium/long-term results will barely be measurable using analogue instruments.
Fanatic Realist is spot on.
This management team has done a miraculous job with guiding Apple and improving its share price. No “real” investor has anything to complain about. The people rasing a stink and instigating lawsuits have no real interest in Apple and its health; they are just looking for quick buck. Only the lawyers will profit from these class action cases. Apple and its customers, along with true “investors” in the company will all pay the price.
It’s funny that when a few Apple employees do something fairly harmless like download a copy of Leopard, everyone here acts outraged over the horrible atrocity committed demanding nothing less than the souls of the employees’ firstborn children. However, when other Apple employees steal actual money, everyone here is outraged at anyone that complains, not the ones breaking the law. You can’t have it both ways. If you’re going to hold Apple to a standard, you have to at least try to be consistent.
Lawyers are not vultures, the people that utilize them are. Lawyers merely help their clients win their case. They have the ethical duty to follow their clients wishes, within the scope of the law, whether they view that position as “right” or not. It is what they are paid to do.
I also find that most people who bash lawyers often are the ones who need them the most when it comes to real estate transactions and the like. So, stop picking on them, I think we could say that almost everyone in every position is a vulture. Just realize that they make a lot of money because they do a specialized task and need to pay off a ton of loans and the like.
And no, I am not a lawyer.
Just my 2 cents. Flame away.
Yeah, ummm, if these Apple employees broke the law, then ummm, they are gonna have to pay repercussions, right? And if the shareholders were the ones getting taken advantage of, well, that SUCKS.
Talk about apologists. You fools need to *wake up*. I love Apple, but that doesn’t mean they don’t have to be held accountable. That wouldn’t be love, that’d be extremism. Reminds me of…well you don’t want to know.
To Apologist and Stockholder:
Anyone who’s been paying attention over the last few years has made on the order of 1000% on Apple stock. To split hairs over management compensation for a team that produced that kind of results is insane. Whatever form the compensation took, it was deserved. It could have been backdated options or straight salary. Take your pick. Stockholders, far from being robbed, have been showered with money. If you’re disappointed in Apple and its management I suggest you sell your 10 shares and move on. The greedy morons responsible for this legal action are only hurting my considerable investment in the company. This whole mess was started by a couple of associate finance professors (dweebs with irrelevant degrees making $18K per year lecturing pimply faced 18 year olds because they can’t find a job in the real world) from Dumptruck, Iowa. It’s an exercise in paper shuffling and self-righteousness.