In a recent legal victory for tech giant Apple, a federal judge has dismissed a lawsuit accusing the company of overpaying CEO Tim Cook and other top executives. The lawsuit claimed that Apple had miscalculated the value of performance-based stock awards, leading to tens of millions of dollars in excess compensation.
U.S. District Judge Jennifer Rochon, presiding over the case in Manhattan, ruled in favor of Apple, stating that the company had adhered to securities laws and U.S. Securities and Exchange Commission rules by clearly outlining its pay methods in detailed compensation tables in its 2023 proxy statement.
Additionally, Judge Rochon found no evidence of improper conduct by Apple's board of directors in awarding executive pay. She noted that the plaintiff, a pension fund affiliated with the International Brotherhood of Teamsters, had not provided the board with sufficient time to address its objections before filing the lawsuit.
The lawsuit alleged that Apple had awarded Cook and four other executives approximately $92.7 million and $94 million, respectively, in performance-based restricted stock units (RSUs) in 2021 and 2022. However, the compensation committee had purportedly intended to award only $77.5 million each year. The plaintiff attributed this discrepancy to the committee's alleged improper calculation of the RSUs' fair values at the time of the grants, arguing that shareholders had been misled ahead of advisory votes on executive compensation.
According to Apple's proxy filings, Cook's total compensation amounted to about $99 million in both 2021 and 2022, with over $82 million attributed to stock awards each year. However, his total pay declined to $63.2 million in 2023. The four other Apple executives received over $26 million each year for the same period.
The dismissal of the lawsuit marks a significant legal victory for Apple and its leadership team, affirming the company's adherence to regulatory standards and compensation practices. Despite the legal challenge, Apple remains focused on driving innovation and delivering value to its shareholders, reaffirming its commitment to transparency and accountability in corporate governance.