U.S. District Judge Jennifer Rochon in Manhattan ruled in favor of Apple, stating that the company adhered to the requirements of securities laws and U.S. Securities and Exchange Commission rules by providing detailed compensation tables in its 2023 proxy statement. These tables accurately described Apple’s pay methods, meeting the standards set forth by regulatory authorities.
On Wednesday, a federal judge dismissed a lawsuit against Apple alleging that the company had overpaid Chief Executive Tim Cook and other top executives by tens of millions of dollars. The lawsuit claimed that Apple had miscalculated the value of performance-based stock awards.
U.S. District Judge Jennifer Rochon in Manhattan ruled that Apple accurately described its pay methods in detailed compensation tables within its 2023 proxy statement. She stated that Apple adhered to the requirements set by securities laws and U.S. Securities and Exchange Commission rules precisely as needed.
Rochon further determined that there was no evidence to suggest that Apple’s board of directors had acted improperly in awarding pay. Additionally, she noted that the plaintiff, a pension fund associated with the International Brotherhood of Teamsters, did not provide the board with adequate time to address its objections before initiating legal action.
Lawyers representing the pension fund did not respond immediately to requests for comment.
The plaintiff alleged that Apple granted Tim Cook and four other executives $92.7 million and $94 million worth of performance-based restricted stock units in 2021 and 2022, respectively. However, the compensation committee had purportedly intended to award only $77.5 million each year.
The plaintiff attributed the purported error to the compensation committee’s improper calculation of the fair values of the restricted stock units (RSUs) at the time of the grants. They contended that this misled shareholders who would be participating in advisory votes on executive compensation, also known as “say-on-pay.”
According to Apple’s proxy filings, Tim Cook’s compensation amounted to approximately $99 million in both 2021 and 2022, with over $82 million attributed to stock awards annually.
In 2023, Cook’s total pay decreased to $63.2 million. The four other Apple executives received over $26 million each year across the same timeframe.
The case, identified as International Brotherhood of Teamsters, Garage Employees Local 272 Labor Management Pension Fund v Apple Inc et al, is being heard in the U.S. District Court for the Southern District of New York under case number No. 23-01867.
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