Icahn gets his seconds, and a just dessert for Apple

by Jeff Dorsch, August 15th, 2008, 4:11 pm

Poor Carl Icahn — he was all set to join the Yahoo! board of directors, bringing along Jon Miller, the former chairman and CEO of AOL. Mean old Time Warner and its army of attorneys stepped in, however, and reminded all that Miller has a non-compete clause in his contract with the media conglomerate that runs through March 2009, prohibiting him from sitting on the boards of companies like Yahoo!.

A mere speed bump in the grand plans of the ambitious Mr. Icahn. He just went to the cupboard and dusted off the nine men who were on his putative slate of nominees when he was conducting a proxy contest against Yahoo!. The online media giant this week selected former Viacom CEO Frank Biondi and John Chapple, the one-time CEO of Nextel Partners, to fill the two new seats on the Yahoo! board.

To my greatest regret, Yahoo! didn’t pick Mark Cuban, the very vocal owner of the Dallas Mavericks. They also passed over Adam Dell, attorney, venture capitalist, and brother of You-Know-Who.

I can’t say whether they’re happier at Yahoo! HQ these days, but they’re certainly dancing! Especially that wild-and-crazy Chief Yahoo, Jerry Yang.

Meanwhile, back on the front lines of the stock-options backdating scandal: Nancy Heinen, the former general counsel of Apple, reached a settlement with the SEC. Without admitting or denying the civil charges brought against her last year, the attorney agreed to pay $2.2 million in returning allegedly ill-gotten gains, penalties, and interest. The settlement also bars her from serving as a director or an officer of a publicly held company for five years and prohibits her from practicing or appearing before the SEC for three years.

According to the SEC’s complaint, Heinen caused two large grants of stock options to be fraudulently backdated in 2001. One block of options went to six Apple executives (including Heinen), while the other grant went to CEO Steve Jobs. Her actions led to Apple failing to account for nearly $40 million in compensation expenses related to the grants — money that should have been charged against the company’s profits for the year.

To review: Backdating the granting dates of stock options isn’t in itself illegal. The questionable legal behavior occurs when executives cover up their actions and fail to disclose them to the board of directors, the company’s shareholders, and the SEC.

The Apple backdating case hasn’t had any blowback for Steve Jobs; all the legal fallout fell on Nancy Heinen and the company’s former CFO, Fred Anderson, who reached his own settlement with the SEC last year. No criminal charges against anyone are expected. Of course, if SEC investigators grilled Jobs, he just would have used his famous Reality Distortion Field on them. I’m pretty sure that’s exactly what happened.