US - The New York City Employees' Retirement System (NYCERS) has reached a settlement of its securities class action against Apple over claims of improper stock options backdating practices.
The computer giant agreed to pay $16.5m in exchange for dismissal of the claims, which were alleged to have taken place between 2001 and 2006.
Backdating is the issuing of stock options to an employee for a date other than an employee's first day of employment, in an effort to potentially boost their value. Apple's past backdating practices have been examined by the Securities & Exchange Commission. In 2007 The SEC filed related charges against former Apple chief financial officer Fred Anderson and former general counsel Nancy Heinen.
As part of the settlement, Apple will pay $14m to be distributed to the plaintiff class of shareholders, lead by NYCERS, and has agreed to establish key corporate governance reforms at the company. Apple will also contribute $2.5m to a dozen corporate governance programmes across the country.
The $14msettlement fund is reserved for the class of investors who purchased Apple securities between Aug. 24, 2001, and June 29, 2006, when Apple first disclosed irregularities in the manner in which it had accounted for thousands of stock options.
New York City comptroller John C. Liu said: "The settlement demonstrates that as institutional investors we can change the ways corporations do business.
"It not only holds Apple accountable. It also protects Apple shareholders going forward by requiring the board to adopt and maintain policies that will help to prevent similar pay abuses in the future."
Corporation counsel Michael A. Cardozo, chief legal officer for the City of New York and counsel to the City's pension funds, added: "This settlement is an excellent example of shareholder advocacy, and compensates shareholders for systematic options backdating at the company. We are happy to have reached an accord with Apple after four years of litigation."
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