Apple will not have to face a trial over a lawsuit accusing it of overpaying its CEO Tim Cook and other top executives by miscalculating performance-based stock awards after a federal judge dismissed the case (via Reuters).
The lawsuit was brought forward by a pension fund acting on behalf of the International Brotherhood of Teamsters. The plaintiffs argued that total compensation granted to Cook and four other executives reached $92.7 million and $94 million each in 2021 and 2022 respectively. However, the plaintiffs argue that these figures should not have exceeded $77.5 million, and that Apple’s compensation committee made an error.
The purported error was ascribed to the committee’s inaccurate calculation of the fair values of the Restricted Stock Units (RSUs) awarded to Cook and others during the grant period. It asserted that this miscalculation misled shareholders participating in advisory votes on executive compensation, commonly referred to as “say-on-pay.”
Judge Jennifer Rochon of the District Court of Manhattan dismissed the case based on the fact that Apple “precisely” described how it arrived at compensating its executives in its 2023 proxy table. Apple’s compensation tables were accurately filled in line with securities laws as prescribed by the Securities and Exchange Commission (SEC), Judge Rochon added.
Judge Rochon also determined that there was no evidence indicating improper actions by Apple’s board of directors in granting compensation. Additionally, the plaintiff was found to have not provided the board with sufficient time to consider their objections before moving forward with the lawsuit.
In both 2021 and 2022, Cook’s compensation amounted to approximately $99 million per year, with over $82 million attributed to stock awards annually, according to Apple proxy filings. However, his total pay decreased to $63.2 million in 2023. The remaining four Apple executives received over $26 million each for all three years.