Billionaire Och sues his old company Sculptor for increasing CEO compensation

Wednesday, billionaire Daniel Och filed a lawsuit against Sculptor Capital Management (NYSE:SCU) Inc, alleging the asset manager he helped start by allowing its CEO to use his clout over the board to obtain "ever-escalating" compensation despite dismal performance.

In a complaint filed in Delaware Chancery Court, Och alleged that James Levin was paid $145.8 million in 2021, more than the majority of other CEOs, including Tim Cook (NASDAQ:AAPL), David Solomon (NYSE:GS), and Jamie Dimon (NYSE:JPM).

Och stated that Sculptor's yearly sales of $626 million "cannot possibly justify" appointing his protégé the nation's fourteenth highest-paid CEO, given that the company's stock price lags behind several of its competitors and its funds perform "below average."

According to the complaint by Och and four other "original and major shareholders" of Sculptor, Levin's compensation was 17.7 times the median of Sculptor's competitors, as determined by the proxy advice company Institutional Shareholder Services.

The lawsuit requests books and records pertaining to Levin's compensation in order to determine if there were violations of fiduciary duty relating to mismanagement and waste, and if Sculptor's board was truly independent.

According to a regulatory filing from April, Levin and Och are two of Sculptor's major owners, with 20.2% and 14.4% of its voting power, respectively.

Levin deserves compensation that is "more competitive" with that of privately held alternative asset managers, according to Sculptor.

After market hours, neither Sculptor nor an outside spokesperson were immediately available for comment.

The Financial Times reported earlier on the lawsuit. Forbes magazine reports that Och is worth $3.9 billion.

As of July 1, Sculptor, formerly known as Och-Ziff Capital Management, is one of just a handful of publicly traded hedge fund organizations, managing around $38.8 billion in assets.

According to Refinitiv, its stock price has dropped 56% this year, leaving it with a market worth of approximately $552 million.

Levin, sometimes known as Jimmy, joined Sculptor in 2006 and was promoted to CEO in 2017. He is also the chief investment officer of the New York-based company.

The director of One Sculptor, Morgan Rutman, resigned earlier this year in protest over Levin's compensation.

Sculptor changed its name in 2019, three years after Och-Ziff settled U.S. probes for allegations of bribery to secure business in five African nations for $412 million.

The case is Och et al. v. Sculptor Capital Management, Inc., No. 2022-0748, Delaware Chancery Court.