A federal judge in Manhattan has dismissed a lawsuit against Apple alleging improper compensation for CEO Tim Cook and other top executives. The lawsuit, filed by a pension fund affiliated with the International Brotherhood of Teamsters, accused Apple of overpaying them due to miscalculations in the value of performance-based stock awards.
The allegations were that Apple had overpaid Tim Cook and four other executives tens of millions of dollars, with payments exceeding the planned amounts set by the compensation committee. In particular, the plaintiff claimed that the fair value of restricted stock units (RSUs) was calculated incorrectly, which could have misled shareholders.
However, U.S. District Judge Jennifer Rochon ruled in favor of Apple, emphasizing that the company had properly disclosed its compensation methods in its 2023 proxy statement, thereby complying with the securities laws and regulations established by the U.S. Securities and Exchange Commission (SEC). Judge Rochon also emphasized that there was no evidence to suggest that Apple’s board of directors acted improperly in determining executive compensation.
One of the key points of the case was the timeframe within which the plaintiff filed the lawsuit. There were allegations that the pension fund did not provide Apple’s board of directors with a sufficient opportunity to consider its objections before filing the lawsuit, and this allegation likely influenced the judge’s decision.
According to details released in documents filed by Apple, Tim Cook received substantial compensation – approximately $99 million annually during 2021 and 2022, with a significant portion of it coming in the form of stock payments. However, in 2023, his total salary dropped to $63.2 million.
The dismissal of the lawsuit is a legal victory for Apple that underscores the company’s compliance with regulatory requirements and corporate governance standards in its executive compensation practices. It also serves as a confirmation of the transparency and legal compliance that Apple has been pursuing in disclosing its compensation practices to shareholders.
While this decision provides clarity on this issue, it also underscores the importance of thorough due diligence and compliance with procedural requirements in corporate governance disputes. As companies continue to navigate a complex regulatory environment, cases such as this one underscore the importance of transparency and accountability in executive compensation practices.