Apollo faces shareholder lawsuit over nine-figure executive tax payout

investmentnews.com:

In the wake of restructuring efforts to distance itself from its founder, Leon Black, Apollo Global Management has another problem. On Wednesday, a lawsuit was lodged claiming that the company wrongfully agreed to pay  $570 million for the personal tax bills of its key executives.

The changes, hastily put in place, were intended to improve Apollo’s management reputation after the fundraising turmoil that followed the controversial exit of Black in March 2021. Black, ousted after news broke of his $158 million dealings with the late Jeffrey Epstein for tax and other services, stands to potentially gain approximately $276 million from this decision. The lawsuit reveals that co-founders Marc Rowan and Josh Harris could each receive upwards of $100 million, with the remaining amount allocated to other senior executives.

The court documents further allege that the founders agreed to secure this staggering payout upon realizing the potential tax implications of dismantling a particular shareholder structure which granted them significant control over Apollo.

The Delaware Chancery Court complaint indicates that the alleged payouts had no valid business justification. The plaintiff, the Anguilla Social Security Board, accuses Apollo’s board of neglecting their fiduciary responsibilities and is seeking a return of the funds.

Despite the accusations, Apollo has defended its actions, emphasizing that shareholders have profited since the transaction. The lawsuit claims, however, that a committee that greenlit the payments had close ties to the founders and operated without due diligence.

According to the lawsuit, the controversy surrounds proposals to reimburse the founders for relinquishing a “tax receivable agreement”, a move that