Jobs on the line: Apple directors face new legal battle

Several board-level directors at Apple, including CEO Steve Jobs, are facing a repeat litigation battle as they are sued for their connection to the company's...

Several board-level directors at Apple, including CEO Steve Jobs, are facing a repeat litigation battle as they are sued for their connection to the company's stock options backdating affair.

The allegations against both current and former employees of Apple amount to Jobs being accused of fraud. Back in June 2006, Apple agreed it had shown irregularities in its stock option grants between 1997 and 2001 and that one of the grants was initially given to Jobs. Subsequently the company said the grant it had been "cancelled and resulted in no financial gain to the CEO".

The latest case, filed to a federal court on Friday of last week, sees a group of executives and directors charged over allegations of Apple manipulating and backdating a particular set of stock option grants.

Apple has been under close scrutiny since it reported record sales for its second quarter in April this year, which it followed with a defence of Jobs amid these hefty profits.

The company's backdating of option grants was done to benefit from better "exercise prices" for the grants, a process that is legal if fully disclosed.

So far, Jobs has escaped prosecution by both the state and federal authorities, while the company's own internal investigations have vindicated his actions. Less fortunate is Apple's former head lawyer, Nancy Heinen, who resigned from the company in 2006 and faces a lawsuit filed by the Securities and Exchange Commission.

Reports suggest Apple's initial legal wrangle in 2006 may have reduced the shareholder value of its stock by as much as $7 billion at the time. But since the 2006 action, Apple's stock has tripled because of healthy sales across its entire product line.




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