Why did Tim Cook’s pay package hold up in court while Elon’s failed?—Fortune

February 9, 2024

Elon Musk’s pay was voided by a Delaware judge, but Tim Cook’s was held up by a New York court. Why?

“What happened with Tim Cook is very common in public companies,” said Marc Hodak, partner at executive compensation consultancy Farient Advisors. “They award performance shares based on the face value of the stock. And each of those performance share units has a market value that’s higher than the face value stock at the time of grant.”

Compensation committees will likely be taking note of differences between these two high-profile cases and planning accordingly.

“I don’t have any question that the size and scale of [Musk’s] pay package was a driver, both in terms of the litigation and the decision that we saw,” said Marc Hodak in this Fortune article. “[$55 billion] is automatically going to attract an unusual amount of scrutiny.”

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About Marc Hodak

Marc Hodak Farient headshot SEC rule

Partner, Farient Advisors, Dallas

New York/Dallas
Mobile: (917) 259-0034

Marc works closely with senior management, boards of directors, and investors, in both public and private companies to develop executive compensation programs that are shareholder-friendly, attractive to management, and responsive to the needs and concerns of boards. He is a recognized thought leader in incentive plan design. His articles have been published in numerous magazines, including ForbesNACD DirectorshipDirectors & Boards, and academic journals. He has been quoted in the national press, including the Wall Street JournalBloomberg, and Reuters. He is a sought-after speaker at forums and conferences throughout the U.S. and Europe on executive compensation, corporate governance, and value management. Marc was named to the 2020 NACD Directorship 100, a list of the most influential people in corporate governance and the boardroom. For the last 10 years, Marc has taught corporate governance as a professor at NYU’s Stern School and as visiting lecturer at the University of St. Gallen in Switzerland. Before joining Farient, Marc was the principal at Hodak Value Advisors and led value-based management implementation and related projects at Stern Stewart & Co. He earned his MBA in finance from the University of Maryland.

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