Apple CEO Tim Cook was not overpaid, judge rules

A federal judge Wednesday dismissed an investor lawsuit accusing Apple of overpaying Chief Executive Tim Cook and four other top executives by tens of millions of dollars.

A local New York pension fund, affiliated with the International Brotherhood of Teamsters, filed the suit last year, claiming that Apple’s board miscalculated the value of performance-based stock awards, leading to an inflated pay package.

US District Judge Jennifer Rochon in Manhattan said the iPhone maker described its pay methods in detailed compensation tables in its 2023 proxy statement, "precisely" as securities laws and the US Securities and Exchange Commission (SEC) rules require.

The judge ruled there was no proof that Apple's board of directors acted improperly in awarding pay and said the plaintiff did not give the board enough time to consider its objections before suing.

Lawyers for the fund did not immediately respond to requests for comment.

The pension plan attorneys claimed that in 2021 and 2022, Apple awarded a respective $92.7 million and $94 million of performance-based restricted stock units to Cook and four other executives, though its compensation committee intended to award just $77.5 million each year.

The investors argued that Apple did not use the proper calculation model to determine the pay packages, and the calculations misled shareholders who cast the advisory votes on the executive pay package, a process known as "say-on-pay."

Rochon said there was no requirement for Apple to use one analytical model over another.

“There is no SEC rule requiring that a specific method for determining executive compensation be used, so long as the chosen method is disclosed...Apple did precisely what [SEC rules] require—presented its compensation process and methods,” Judge Rochon said.

The case is in sharp contrast to last month’s lawsuit brought against fellow tech billionaire Elon Musk and Tesla’s Board of Directors., in which shareholders questioned the validity of a $55 billion compensation package approved by board members.

On January 30th, a Delaware judge denied Musk's billion-dollar performance-based package, finding the EV car manufacturer’s negotiations process was 'deeply flawed,' rife with nepotism, and had no proper oversight.

Meantime, Apple proxy filings show that in 2021 and 2022, Cook's pay package was about $99 million each year, not including the more than $82 million of stock awards also received in those years.

Considered one of the most popular big tech CEOs among employees, Cook was paid much less in 2023, at just $63.2 million. In mid-January of last year, Apple announced the CEO's salary would be slashed by more than 40% in 2023 at Cook's request.

The four other Apple executives were each awarded more than $26 million each of the three years.

The case is International Brotherhood of Teamsters, Garage Employees Local 272 Labor Management Pension Fund v Apple Inc et al, U.S. District Court, Southern District of New York, No. 23-01867.