Apple: We Want to Empower Investors

David Einhorn told the Apple (NASDAQ:AAPL) top management that getting shareholder vote would be an unnecessary roadblock to issuing preferred stock, the company said in a court filing on Wednesday.

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Apple was responding to a lawsuit filed by Einhorn’s Greenlight Capital fund against it in the U.S. District Court in Manhattan, hoping to block a February 27 shareholders’ vote on a proxy proposal. Einhorn wants Apple to issue perpetual preferred stock with a 4 percent dividend to existing shareholders.

Apple said in its response that while it was not opposed to issuing preferred stock, it wanted to ensure that shareholders had a say in the matter. Einhorn “viewed requiring shareholder approval for his … proposal as a ‘roadblock that was not needed’,” Apple chief financial officer Peter Oppenheimer said in the filing. “He said that he wanted to ‘take the risk away’ of a shareholder vote and asked ‘why make it harder?’

“We told Mr. Einhorn that Apple was considering his proposal, but that the Board would not issue his proposed perpetual preferred shares without shareholder approval,” Oppenheimer added.

“Apple’s proposal only formalizes Apple’s stated commitment to seek shareholder approval if it wants to issue preferred shares,” the company said in the filing. Greenlight “will suffer no injury, much less irreparable injury, absent the preliminary injunction.”

The company also responded to Einhorn’s allegation that its “bundling” of three different proxy proposals into one violated U.S. Securities and Exchange Commission rules. “Bundling occurs when discrete, material proposals are combined in a manner that puts shareholders to an unfair choice,” Apple said in the filing. “That is not the case here.”

According to the company, the preferred stock proposal also attempts to provide for majority voting for directors and establishing a par value for Apple stock.

Apple added that several shareholder groups were in support of its proposal. “This report reflected a view widely held by shareholder advocates that corporate boards should not have ‘blank check’ authority to issue preferred shares,” it said.

Greenlight is expected to file its own response on Thursday. A hearing in the case is scheduled for February 22.

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