March 5, 2024

A pension fund affiliated with the International Brotherhood of Teamsters has accused Apple of improperly awarding compensation to CEO Tim Cook and four other executives over the years 2021 and 2022. The plaintiff alleges that Apple incorrectly calculated the value of performance-based stock awards, resulting in payments exceeding the intended amount.

According to the plaintiff, the compensation committee had intended to award each executive $77.5 million annually. However, Apple allegedly awarded Cook and the others $92.7 million and $94 million for the respective years, based on what the pension fund claims was an erroneous calculation of the stock awards’ “fair values” at the time of the grants.

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The dispute revolves around whether Apple adequately disclosed its compensation methods to shareholders, who cast advisory votes on executive pay during “say-on-pay” sessions. The pension fund argues that shareholders were misled by Apple’s proxy statements.

However, U.S. District Judge Jennifer Rochon ruled in favor of Apple, stating that the company’s proxy statements in 2023 accurately described its compensation practices in accordance with securities laws and U.S. Securities and Exchange Commission rules. The judge found no evidence of improper actions by Apple’s board of directors in determining executive pay.

Furthermore, Judge Rochon noted that the plaintiff had not given Apple’s board sufficient time to address its objections before filing the lawsuit.

Apple’s proxy filings reveal that Tim Cook’s total compensation amounted to approximately $99 million annually in both 2021 and 2022, with more than $82 million attributed to stock awards each year. However, Cook’s total pay decreased to $63.2 million for the year 2023.

The ruling marks a victory for Apple in the legal dispute over executive compensation, affirming the company’s adherence to regulatory requirements and corporate governance standards.

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