Billionaire Och sues former firm Sculptor over escalating CEO pay (updated)

Sculptor Capital Management

25/08/2022 19:52

(Adds Sculptor comment to Aug. 24 article, changes date in
dateline)
    By Jonathan Stempel
    NEW YORK, Aug 25 (Reuters) - The billionaire Daniel Och has
sued Sculptor Capital Management Inc, accusing the asset manager
he helped found of letting its chief executive officer wield his
power over its board to extract "ever-escalating" pay despite
subpar performance.
    In a complaint filed on Wednesday in Delaware Chancery
Court, Och said James Levin was paid $145.8 million in 2021,
more than most other CEOs including Apple's  AAPL.O  Tim Cook,
Goldman Sachs'  GS.N  David Solomon and JPMorgan Chase's  JPM.N 
Jamie Dimon.
    Och said Sculptor's annual revenue of $626 million "cannot
possibly justify" making his protege the country's 14th
highest-paid CEO, while the firm's stock price lags many peers
and its funds suffer from "less than mediocre" performance.
    According to the complaint by Och and four of Sculptor's
other "original and largest shareholders," Levin's pay was 17.7
times the median of Sculptor's peers, as measured by proxy
advisory firm Institutional Shareholder Services.
    The lawsuit seeks books and records concerning Levin's pay,
to assess whether there were breaches of fiduciary duty related
to mismanagement and waste, and whether Sculptor's board was
truly independent.
    According to an April regulatory filing, Levin and Och are
among Sculptor's largest shareholders, and controlled a
respective 20.2% and 14.4% of its voting power.
    Sculptor said Levin deserved pay that is "more competitive"
with that of privately held alternative asset managers.
    "Mr. Och's filing is misleading and full of falsehoods that
present a grossly distorted view of board governance at the
company," Sculptor said in a statement. "We look forward to
setting the record straight through the legal process."
    Sculptor also accused Och of holding a "grudge" against its
leadership following his "acrimonious separation" from the
company.
    The lawsuit was reported earlier by the Financial Times. Och
is worth $3.9 billion, according to Forbes magazine.
    Once known as Och-Ziff Capital Management, Sculptor is one
of only a handful of publicly traded hedge fund companies,
overseeing about $36.8 billion of assets as of July 1.
    Its stock price has fallen 56% this year, leaving it with a
market value of about $552 million on Wednesday, according to
Refinitiv.
    Levin, who is known as Jimmy, joined Sculptor in 2006, and
became CEO last year. He is also the New York-based firm's chief
investment officer.
    One Sculptor director, Morgan Rutman, resigned early this
year in protest over Levin's pay.  urn:newsml:reuters.com:*:nL4N2UF0BQ
    Sculptor changed its name in 2019, three years after
Och-Ziff reached a $412 million settlement of U.S. probes into
alleged bribery to win business in five African countries.
    Och said he requested the name change, which occurred after
he retired as board chairman.
    The case is Och et al v Sculptor Capital Management Inc,
Delaware Chancery Court, No. 2022-0748.

 (Reporting by Jonathan Stempel in New York; Editing by Leslie
Adler and Cynthia Osterman)
 ((jon.stempel@thomsonreuters.com; +1 646 223 6317; Reuters
Messaging: jon.stempel.thomsonreuters.com@reuters.net))