Private equity and investment firm Apollo Global Management (NYSE:APO) is in legal trouble for payments of $570 million to its three top executives as part of its restructuring effort. According to a Financial Times report, one of its shareholders, the Anguilla Social Security Board, filed a lawsuit against APO for agreeing to cover the personal taxes of the founders, Leon Black, Marc Rowan, and Josh Harris, following Black’s ouster. Let’s delve deeper.
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Anguilla Social Security Board Wants Money to be Returned
For background, investors should note that Leon Black stepped down from his role as the CEO of Apollo Global Management in 2021 because of his business ties with the late Jeffrey Epstein. Hit by scandal, Apollo Global Management announced a management shakeup and its plan to eliminate the dual-class share structure that removes founders voting control.
While Black left the company, Rowan became the CEO of the firm.
The lawsuit alleged that these three founders provided a series of unjustified reasons to get the $570 million payout, as they were aware that they could face considerable tax bills if the company eliminated the dual-class share structure to pacify investors amid the scandal. The Anguilla Social Security Board is demanding the money be returned to the company.
In response to the above matter, Apollo defended the transaction and highlighted that the company’s shareholders have benefited since the deal was announced. It’s worth underlining that Fitch Ratings affirmed APO’s long-term issuer default rating at ‘A’ in November 2021, stating that the company has made significant management changes and announced governance enhancements, including the plan to eliminate its dual-class share structure, which is positive.
Whether the founders will return the money to the company remains to be seen. However, APO’s image has taken a hit following the scandal. Against this background, let’s look at what the Street recommends for its stock.
Is Apollo Global Management a Buy or Sell?
Similarly to Fitch, investors have cheered APO’s restructuring move. Apollo Global Management stock has gained nearly 80% since Rowan assumed the CEO role on March 22, 2021.
Analysts also have faith in the stock. Currently, the APO stock has a Strong Buy consensus rating based on nine Buy and three Hold recommendations. Analysts’ price target of $94.40 implies 13.65% upside potential from current levels.
