Former Apple Inc. General Counsel Nancy Heinen has agreed to pay US$2.2 million to settle charges leveled by the U.S. Securities and Exchange Commission (SEC) that she helped backdate stock options for company executives, including CEO Steve Jobs, court documents released Thursday showed.
Heinen will pay nearly $2.2 million, most of it representing profits on stock gains and interest on that money, and will be barred from serving as an officer or director of a publicly-traded company for five years, according to a settlement document filed in a California federal court Thursday.
As part of the settlement, Heinen neither admitted or denied any wrongdoing.
Heinen's move wraps up the 2007 case against her and former Apple Chief Financial Officer Fred Anderson. The two had been accused of backdating stock options granted to Apple senior executives, including Jobs, during 2001. Jobs, said the SEC, had received approximately 7.5 million shares of backdated options in December of that year.
Backdating, which occurs when a company changes the date of the option grant to one when the share price was lower, is not necessarily illegal, but it must be acknowledged in SEC filings and accounted for in earnings reports and tax filings.
The SEC claimed that Heinen had backdated options, including one granted to her, and alleged she also told her staff to prepare documents that doctored the record of when Apple's board of directors actually approved the options. In one case, alleged the SEC, Heinen simply made it up.
"The Commission further alleges that Heinen then signed fictitious Board minutes stating that Apple's Board had approved the grant to Jobs on October 19 at a 'Special Meeting of the Board of Directors' -- a meeting that, in fact, never occurred," said the SEC in a statement Thursday.
According to the SEC, Heinen's actions resulted in Apple underreporting expenses by nearly $40 million; $20.3 million of that was related to the options granted Jobs.
In October, 2006, Jobs was cleared of any wrongdoing by an internal company investigation, although he was aware of the backdating and later apologized to shareholders, saying that the problems were "completely out of character for Apple."
Anderson, who had been the chief financial officer at Apple from 1996 through mid-2004, resigned from his position on the company's board shortly after the 2006 investigation wrapped up, but before SEC charges were filed in April 2007. Anderson immediately settled the charges by paying a fine of $150,000 and giving up the $3.5 million he had made on the options.