Become a MacRumors Supporter for $25/year with no ads, private forums, and more!

Former Apple General Counsel Settles Backdating Charges

IJ Reilly

macrumors P6
Original poster
Jul 16, 2002
17,889
1,478
Palookaville
WASHINGTON (Reuters) - Former Apple Inc (NasdaqGS:AAPL - News) general counsel Nancy Heinen has agreed to pay $2.2 million to settle options backdating charges, the U.S. Securities and Exchange Commission said on Thursday.

Heinen also agreed to be barred from serving as an officer or director of a public company for five years. She settled the case without admitting or denying the charges, the SEC said.

The charges relate to two large options grants to senior executives of Apple, including a grant to Chief Executive Steve Jobs of 7.5 million options in December 2001.

Apple, the fast-growing consumer electronics company, was also investigated for irregularities over its accounting for stock options awarded to employees.

The SEC later cleared the company after it cooperated with the investigation, but sued former Apple Chief Financial Officer Fred Anderson and Heinen.

...

http://biz.yahoo.com/rb/080814/apple_backdating.html
 

IJ Reilly

macrumors P6
Original poster
Jul 16, 2002
17,889
1,478
Palookaville
The SEC never seemed to be particularly interested in Jobs beyond questioning him. The focus of the investigation always appeared to be on Heinen and Anderson.
 
Comment

MacRumors

macrumors bot
Apr 12, 2001
50,441
11,827
Former Apple General Counsel Settles Backdating Charges

https://www.macrumors.com/images/macrumorsthreadlogodarkd.png

SetteB.IT and BusinessWeek report on Nancy Heinen's settlement with the Security and Exchange Commission (SEC) on the backdating investigation.
The SEC said that company records pertaining to a grant of 4.8 million options to Apple’s senior executive team in February of 2001, and a grant of 7.5 million shares made to CEO Steve Jobs in December of 2001 had been altered to conceal what it called a fraud. The result was that Apple underreported its stock-related expenses by nearly $40 million.
The SEC had previously settled with Apple CFO Fred Anderson and had cleared Steve Jobs of any wrongdoing in the matter.

The settlement terms included a payment of $2.2 million in repayment, interest and penalties and she is barred from service as an officer in a public company for five years. She did not admit or deny any wrongdoing in the matter. This should draw the a close to investigations surrounding Apple's backdating controversy.

Article Link
 
Comment

Cherimoya

macrumors member
Feb 12, 2008
66
0
NJ
This was displayed on the news ticker in the square at Canary Wharf in London tonight so I guess it must be big news in the Finance industry.
 
Comment

theheadguy

macrumors 65816
Apr 26, 2005
1,124
1,326
california
But why would they settle if they didn't do anything wrong? Won't someone stand up and protect the innocent? </sarcasm>
 
Comment

IJ Reilly

macrumors P6
Original poster
Jul 16, 2002
17,889
1,478
Palookaville
No, it's greed alright. Backdating options is a way of putting cash in pockets without having to report it to the stockholders.
 
Comment

IJ Reilly

macrumors P6
Original poster
Jul 16, 2002
17,889
1,478
Palookaville
What exactly is backdating options, and why is/was apple in trouble for it?

It means that the options were recorded as being granted to the recipients on a date before they were actually given. Often this builds in an instant profit for the grantee. Companies can do this if they like, but they have to report the difference as an expense.
 
Comment

rlmccormick

macrumors regular
Jun 7, 2008
120
5
Greed?
I doubt it.
You think Apple did this on purpose?
I call it cumbersome and confusing SEC regs. Just like the IRS.

Not a chance. The "regs" may be confusing to you and me but the people at the top are well versed. They took a chance and got caught. Simple as that.
 
Comment

Sabenth

macrumors 6502a
Jan 24, 2003
887
3
UK
am i to understand that what has happend or happend was a gamble it didnt work they lost and people made a fuss over it .
 
Comment

Doctor Q

Administrator
Staff member
Sep 19, 2002
38,324
4,749
Los Angeles
To me, agreeing not to serve as an officer in a public company for five years seems a bit like an admission of guilt, even if Nancy Heinen "did not admit any wrongdoing". But I know people often settle for ambiguous statements like that and it doesn't really prove anything.
 
Comment

hulugu

macrumors 68000
Aug 13, 2003
1,833
14,498
quae tangit perit Trump
It means that the options were recorded as being granted to the recipients on a date before they were actually given. Often this builds in an instant profit for the grantee. Companies can do this if they like, but they have to report the difference as an expense.

This is a pretty succinct explanation. The failure to report was really the problem as I understand it.

Don't you always wonder how the conversation went when someone decided this was a good idea? Was it a group decision or did one person convince the others that "everyone does it?"
 
Comment

ajhill

macrumors 6502
May 2, 2007
268
0
Give it a rest.

At the 2007 shareholder's meeting there wan't a single person who was upset with the treatment of the Steve Jobs' options back dating.

For those who do not know (Apparently most people here) SJ explained that the options were dated to the date that the Board decided to issue them to SJ. The paperwork was filed sometime later (after Apple stock went higher. But hey, back then it ONLY went HIGHER [before the SEC started poking around]) and the previous date and lower cost basis was used, the date the board decided to issue the stock options.

The real issue here (and I know it gets lost in Government investigations) is wether or not any stockholders were harmed by the companies actions. Well, lets see My IRA went up 250% since the time of the questionable stock option grant. The government investigation took out a nice chunk (ironically, the Government investigation cost me money (not the stock options grant).

Incidentally a smug reporter (er "Concerned Shareholder" asked Steve Jobs if he was going to return the difference in the profit he made as a result of the difference in the issuance of the stock options. To which Steve Jobs said "No" and there was applause from the audience full of shareholders.

The fact is that Apple pays Steve Jobs only in stock options, no salary. (Although they did also give him a jet) The board decides what and when he gets paid. As a shareholder I'm okay with that. In fact I think he might be underpaid. And if I should ever disagree with the compensation, backdated or not, I will simply sell my Apple shares.

The real question is where would the stock price be right now if the Government had drop the investigation in a more timely manner. Just how much money has the Government cost shareholders?

Al:)
 
Comment
Register on MacRumors! This sidebar will go away, and you'll see fewer ads.