Although Jobs isn't being indicted for his role in Apple's backdating of stock options grants, he will likely be called to the stand in at least two other cases, and there could be trouble over stock options at Pixar Animation Studios, where Jobs was also CEO before its buyout by Walt Disney, the article adds. Pixar has said its former chief financial officer could face civil charges from securities regulators.
In February, The Wall Street Journal reported that Jobs helped negotiate an employment contract with top film director John Lasseter and Pixar that included a large stock-options grant with an “especially well-timed date." The options grant carried the lowest share price of the previous year -- on a date more than three months before the employment contract was actually signed, the report said. Jobs, then Pixar’s chairman and chief executive, signed the agreement on behalf of Pixar, though it’s unclear if he played a role in selecting the date, according to the WSJ.
However, in March Disney said that that while stock-option awards to some employees of Pixar Animation Studios were backdated, no one associated with Disney today, including board member Jobs, deliberately did anything wrong. Federal prosecutors and the Securities and Exchange Commission are looking into the backdated grants made to key Pixar employees several times since 1997, but before Disney bought Pixar in 2006.
The biggest options-related issue still looming over Apple is a shareholder lawsuit filed in U.S. District Court in San Jose accusing the company and Jobs of defrauding investors with the company's backdating practices, says the AP. Last December, shareholders suing officers and directors of Apple refiled their claims to address a judge’s ruling that some fraud complaints were too old and that the lawsuit contained scant details about wrongdoing by the company’s top officials.
The revised complaint tallied up proceeds of the exercise by Apple executives of the backdated options at more than US$1 billion and places the value of shares held by Jobs that were received in exchange for backdated options at nearly $1 billion. The amended lawsuit also tied the Apple board closer to the backdating of shares to executives by alleging that the full board acted as the company’s compensation committee when it signed off on options with false grant dates. Most shareholder lawsuits are settled out of court, but Apple could be forced to cough up millions in penalties if a jury finds it liable, the AP adds.
Jobs will also probably have to testify in the Securities and Exchange Commission's civil trial of Apple's former general counsel, Nancy Heinen. The SEC sued Heinen in April, accusing her of backdating a 7.5 million-share option grant to Jobs in 2001 and earlier grants to his executive team. Heinen, 50, resigned in May 2006 without explanation, two months before Apple disclosed an investigation into option backdating. The internal inquiry led the company to record $84 million in charges to correct its accounting.
The Heinen case carries less risk to Wall Street's perception of Apple than the shareholder lawsuit, but it "could provide illuminating details about Jobs' role in the options scandal," the AP says. The article adds that Jobs' position won't likely be threatened by any testimony he might give in either case as Apple has already acknowledged that Jobs was aware of backdating, but says he didn't benefit financially from it and didn't understand the accounting implications.
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