Reuters reports that a federal judge has thrown out a lawsuit alleging that Apple overpaid Chief Executive Tim Cook and other top executives by tens of millions of dollars due to miscalculations in the value of performance-based stock awards.
According to the plaintiff, Apple granted $92.7 million and $94 million in performance-based restricted stock units to Cook and four other executives in 2021 and 2022, respectively. However, the compensation committee supposedly intended to award only $77.5 million each year.
The plaintiff claimed that the committee made a mistake by not correctly calculating the fair values of the RSUs when granting them. This allegedly led to shareholders being misled when voting on executive compensation, also known as “say-on-pay.”
However, Judge Jennifer Rochon, a US District Judge in Manhattan, stated that the iPhone maker outlined its payment methods in detailed compensation tables in its 2023 proxy statement, precisely as mandated by securities laws and rules set by the US Securities and Exchange Commission.
Rochon also concluded that there was no evidence to suggest that Apple’s board of directors acted improperly in awarding pay. Additionally, the judge noted that the plaintiff, a pension fund affiliated with the International Brotherhood of Teamsters, did not provide the board with sufficient time to address its objections before filing the lawsuit.
Like many big companies, Apple’s top executives get paid in different ways—there’s a basic salary, extra money based on performance, stocks, and other perks that they negotiate individually.
According to Apple’s filings, Cook made about $99 million in 2021 and 2022, mostly from stock awards. But in 2023, his pay dropped to $63.2 million. The other four Apple execs got over $26 million each year for the past three years.
