Backdating itself isn't illegal, but not telling the SEC or stockholders about it is considered securities fraud.SAN FRANCISCO (Market Watch) -- Steve Jobs has managed to revolutionize both the consumer electronics and entertainment industries, but the onetime wunderkind can't seem to shake the stigma of the stock-options backdating scandal that enveloped Silicon Valley in recent years.(who broke the backdating story), Jobs had an award of 7.5 million shares approved at Apple’s August 29 board meeting, at which point Apple’s share price was .83.However, because he continued to argue over the point at which they would vest, Apple missed the deadlines it needed to file the right information with the SEC and its auditors.Some people even suggest Jobs might have to step down as Apple CEO. Backdating stock options refers to the practice of writing an agreement concerning the award of stock options to make it look like they were awarded earlier than they were.Stock options are frequently tied into executives’ compensation, giving them the option of purchasing a certain amount of stock at a set price.December 28, 2006: As the rest of the country enjoys a much-deserved holiday, Apple gets embroiled in a stock “backdating” scandal.The news, centered on the dubious awarding of stock options to Steve Jobs, prompts Apple share prices to fall.
Combined with the eroded value of his stock options in the dot-com bust, Jobs said he wasn't feeling properly compensated for his work.
He was also feeling pretty stung that Apple's board never approached him with a stock option reward without his prompting.
The SEC claimed Heinen fraudulently cooked up options grants by misrepresenting the true dates the grants were awarded to times when the price was at a historic low.
When the matter makes court, Apple’s former general counsel pays .2 to settle the charges that she had backdated stock options for Jobs, herself and others — as well as creating fake paperwork to hide this fact.
Stock options are frequently tied into executives’ compensation: giving them the option of purchasing a certain amount of stock at a set price.