“The complaint effectively admits (by pasting excerpts of Apple’s disclosures in support of its claims) that Apple did precisely what … SEC rules require — presented its compensation process and methods through detailed compensation tables,” Judge Rochon remarked.
Apple Beats Claims It Overpaid CEO Tim Cook, Other Brass: Background of the Dispute
The dispute traces back to January 2023 when Apple submitted its proxy statement for a March 2023 shareholder meeting, divulging details about executive compensation, particularly the allocation of restricted stock units (RSUs). These RSUs, the right to receive Apple stock in the future under specific conditions, form a significant part of executives’ compensation packages.
Compensation Structure
According to the proxy statement, Apple’s executives receive RSUs divided into time-based and performance-based categories. While time-based RSUs vest with continued service, performance-based RSUs hinge on the company achieving predetermined milestones.
Allegations and Response
The crux of the lawsuit centered on allegations that Apple’s compensation committee inaccurately valued the performance-based RSUs, resulting in executives receiving excessive compensation beyond disclosed amounts. However, Apple and its co-defendants vehemently refuted these claims, arguing that the company’s compensation practices adhered to legal standards, and its disclosures were comprehensive and compliant.
Swift Judicial Response
Judge Rochon’s swift ruling, delivered just a day after oral arguments, underscored the lack of merit in the plaintiff’s claims. The decision marks a significant legal victory for Apple and its leadership, affirming the company’s adherence to regulatory standards and discretion in compensation practices.
