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Apple may be about to put the dirty options scandal behind it. CEO Steve Jobs and several Apple board members reportedly reached a preliminary settlement with shareholders, who were suing on behalf of the company, for damages resulting to the options brouhaha.
The settlement comes close to two years after the company took an $84 million charge (and denied Steve Jobs did anything wrong) for improperly booked stock options.
The upshot? On Oct. 31, when the final settlement hearing is held, the options episode could become a piece of the past.
"Win or lose, this is a win," says Steve London, a securities attorney and partner at Pepper Hamilton. "The company is the one that recovers since the case redresses the stock options issue."
The derivative lawsuit is a weird technique that could make your brain bleed, but it works like this: Shareholders sue the board or certain executives on behalf of the company, for damages related to backdated stock options. The board/execs settle, and the insurer pays the company, not the shareholders, to resolve the issue.
Under this preliminary settlement, Apple gets $14 million from the board's insurer, according to an Associated Press report, and the company ponies up the cash ($8.5 million) for plaintiff's legal fees as well as $350,000 in expenses. Shareholders do not directly benefit from the suit (cash-wise, anyway), but they could benefit by restoring Apple's good name.
And although this is just a preliminary settlement, chances are good that it will go through without a hitch, says London.
"It is very unlikely that [Apple] would have announced this without some sense that the court would approve it," says London.
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