Apple asserts that Einhorn's suit is holding shareholders "hostage" in an attempt to force the company into making a decision beneficial to the hedge fund chief's financials. As noted by the Financial Times, Apple's response to Einhorn's complaint is in line with comments made by CEO Tim Cook on Tuesday at the Goldman Sachs Internet and Technology Conference, where the executive called the lawsuit a ?silly sideshow.?
At issue is Apple's so-called "Prop 2" proxy proposal slated to be discussed at the company's upcoming shareholders' meeting at the end of February. Relating to company governance, Prop 2 would effectively wrest the power to issue preferred stock away from Apple's board and put it in the hands of shareholders.
Greenlight's Einhorn is seeking for the issuance of perpetual preferred shares, dubbed "Greenlight Opportunistic Use of Preferreds" or "GO-UPs," which would in theory allow Apple to mete out some of its $137 billion cash hoard with shares that pay higher than normal dividends. Apple claims the GO-UPs only serve Greenlight's financial interests and "do not serve the public interest."
From a legal standpoint, the suit targets Prop 2's "bundling" of multiple votes into one, a breach of U.S. Securities and Exchange Commission guidelines. For its part, Apple said the SEC reviewed the proxy statement and had no qualms with its contents.
From the filing:
In short, plaintiffs cannot show any hardship of not obtaining injunctive relief, much less hardship that is greater than the financial harm to Apple and its shareholders of not having Proposal No. 2 put to a vote.
According to a declaration from Apple CFO Peter Oppenheimer, also filed on Wednesday, Einhorn referred to the proposal as a "roadblock" in a conference call earlier this month. Oppenheimer informed the hedge fund manager that Apple was considering his proposal, but confirmed that the company's board would not issue GO-UPs without shareholder approval.
Most recently, Presiding Judge Richard Sullivan agreed to accelerate the case's schedule by a number of days due to the quickly-approaching shareholder meeting. Greenlight is scheduled to file its own response by Friday ahead of oral arguments slated to start on Feb. 19.