Apple Computer sued in Federal, State courts over stock options

By Jason Bennert, Bay City News Service

July 6, 2006

CUPERTINO (BCN) - Apple Computer Wednesday announced that it has been sued in both federal and state courts in connection with its past stock options awards to company officers and directors, including CEO Steve Jobs.

Apple is one of a number of Silicon Valley companies that have come under scrutiny from federal regulators in recent months over the practice of "back-dating'' stock options. Legally, options are supposed to allow the recipient to purchase a set number of shares at the price on the day the option was granted.

Recipients make money if the price of the stock rises between the dates the options are granted and the date they are exercised. According to regulators some companies, including possibly Apple, allowed their options recipients to purchase shares at the lowest price from a range of dates instead of the date they were granted.

In a statement, Apple would not discuss specifics about the lawsuits it is facing.

"Both suits make claims against current and former officers and directors with respect to the company's awarding of stock option grants,'' the statement said. "Last week, Apple proactively announced that it had discovered irregularities in the issuance of certain stock option grants and is conducting an independent investigation into the matter. The company is currently evaluating its response to the lawsuits.''

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