Apollo says backdating settlement approved

NEW YORK: For-profit-education company Apollo Group Inc said on Friday it received preliminary court approval for an agreement to settle a shareholder derivative lawsuit related to options backdating. In a U.S. Securities and Exchange Commission filing, the company said the suit had also involved current and former officers and directors of the company. Shareholder derivative lawsuits are brought by a shareholder on behalf of the company.

The suit, filed in U.S. District Court in Arizona in September 2006, claimed senior Apollo insiders diverted hundreds of millions of dollars of corporate assets to themselves by manipulating stock option grant dates. Apollo's internal investigation revealed in December 2006 that the company used the wrong date for option awards and failed to document the dates accurately.

According to court documents, the settlement agreement required Apollo to reprice 413,000 stock options, if it had not done so already, implement "substantial" corporate governance reforms, and have the company or its insurers pay up to $2.75 million in attorney's fees. The company also received approval for a settlement agreement in a case brought to the Superior Court of the State of Arizona, it said in the filing.