Washington, D.C. - The Securities and Exchange Commission today announced that it has settled options backdating charges against Nancy R. Heinen, the former General Counsel of Apple. Besides being forced to pay $2.2 million in disgorgement, interest and penalties, Heinen will also be barred from serving as an officer or director of any public company for five years and will be "suspended from appearing or practicing as an attorney before the Commission for three years."
The settlement closes a chapter that began with a complaint filed by the Commission in April 2007, accusing Heinen to have fraudulently backdated two large options grants to senior executives of Apple. The grants involved .8 million options to Apple’s Executive Team in February of 2001 and 7.5 million options to Apple Chief Executive Officer Steve Jobs in February of 2001. The SEC said that Apple underreported its expenses by nearly $40 million as a result.
Heinen was also accused of directing her staff to prepare documents falsely indicating that Apple’s Board had approved the Executive Team grant on January 17. As a result, Apple failed to record approximately $18.9 million in compensation expenses associated with the 4.8 million option grant to six members of its Executive Team (including Heinen).
As far as CEO Steve Jobs’ December 2001 grant is concerned, the Commission said that Heinen caused Apple to backdate the grant to October 19, 2001, when Apple’s share price was lower. As result, Apple failed to record $20.3 million in compensation expense associated with this in-the-money options grant. The SEC also believes 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."
Heinen agreed to the settlement without admitting or denying the allegations. The $2.2 million payment includes disgorgement of $1,575,000 plus $400,219.78 in interest and a civil penalty of $200,000.
Steve Jobs was recently cleared of criminal charges in the Apple backdating case.