A federal judge on Wednesday dismissed a lawsuit against Apple Inc. AAPL that accused the company of overpaying CEO Tim Cook and other top executives.
What Happened: The lawsuit, filed by a pension fund affiliated with the International Brotherhood of Teamsters, alleged that Apple had overpaid Cook and other executives by tens of millions of dollars due to a miscalculation in the value of performance-based stock awards.
U.S. District Judge Jennifer Rochon in Manhattan dismissed the lawsuit, stating that Apple had accurately disclosed its pay methods in its 2023 proxy statement, in line with securities laws and U.S. Securities and Exchange Commission rules, reported Reuters.
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Rochon also found no evidence of misconduct by Apple’s board of directors in awarding the pay and noted that the plaintiff did not provide the board with sufficient time to consider its objections before filing the lawsuit.
The plaintiff claimed that Apple had awarded Cook and four other executives $92.7 million and $94 million of performance-based restricted stock units in 2021 and 2022, respectively, despite the compensation committee intending to award only $77.5 million each year.
The plaintiff attributed this alleged error to the committee’s improper calculation of the RSUs’ fair values at the time of the grants and claimed that it misled shareholders who would be voting on executive compensation.
Why It Matters: This lawsuit’s dismissal comes at a time when the debate over executive compensation is gaining traction. Tesla CEO Elon Musk last month ended up losing his $56 billion pay package after a Delaware chancery court judge ruled it to be "an unfathomable sum."
According to a September 2023 report, the average annual earnings for CEOs of the leading 350 U.S. companies stand at $27.8 million. This figure is 399 times higher than the average worker’s salary and reflects a staggering 1,460% surge in executive compensation since 1978 when adjusted for inflation.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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