Apple corporation stock option backdating
Given that the class attorneys are negotiating money for third parties instead of their own putative clients (for their own benefit, no less), there is also a breach of fiduciary duty that raises questions whether the class attorneys meet the Rule 23(a)(4) standard.The settlement is further problematic in that the vast majority of class members are entitled to zero compensation; it is far from clear that the sole lead plaintiff is a member of this subclass.Second, you continue to talk about recognition of income, but, even if an NSO, subject to Section 409A, there would typically be no recognition of income unless and until the option is actually exercised by the optionee.Nowhere do you mention that the option was actually exercised and, in fact, you seem to suggest that it has not been exercised, as it may need to be exercised within 90 days of a termination.
But it can't do so in a vacuum: it can only do so on behalf of a class member who is being ripped off by these attorneys.
It was the pseudo-scandal launched by the Wall Street Journal's investigative unit, after its reporters began following up on an academic report that demonstrated many executive stock options awards were too well-timed to be plausible.
The basic idea was that many companies seemed to award stock options on days when their stocks were at low-points, which increased the value of the options when the stock increased and made the stock cheaper to buy for the executives.
Frank writes: The magnitude of the settlement compared to the original claims demonstrates that it is an extortionate nuisance settlement, being made because it would cost more to defend the suit than to pay the attorneys to go away.
But it should be noted: the settlement is not just outrageous, it is illegal.