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Apple says Greenlight suit not in shareholders' best interest, amendment 'unworkable'

post #1 of 10
Thread Starter 
In a filing with a New York District Court on Wednesday, Apple offered a point-by-point counter to a suit being levied by shareholder Greenlight Capital's David Einhorn, who is looking to strike a proxy proposal regarding preferred stock issuance from an upcoming shareholders' meeting.

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.?

Greenlight


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.

post #2 of 10
Obviously not.
The selfish greedy bastard is only looking rape the company.
Now, Einhorn will know his limits with Apple and go rape some other company.
Edited by AppleSauce007 - 2/13/13 at 5:25pm
post #3 of 10
I hope he sells off his Hedge Fund's stake. Love to see him explain it to his investors.
post #4 of 10
So he wants the SEC to force Apple to give out shares that pay high dividends and would basically only benefit him and his company. And doesn't want Apple to be able to cut their preferred shares, which again only benefit him.

And the one legal leg he has to stop Apple is this bundling issue which apparently Apple cleared already.

Oops.
post #5 of 10
What a tool. Wait, no actually a tool is useful.
post #6 of 10
Not a fan of the GO-UPs or most preferred shares in general, but I like the due process here. I like Apple recognizing the call out for capital management and to produce plans for shareholders on what to do with that mountain of cash. So, yes, Einhorn does make "tool" status, perhaps a flashlight with wearing batteries.

I would like to think Apple can offer more in shareholder value than simply offering 2% dividend hike too. It's a talented company with an incredible platform. What IOS watch, home systems/appliances, car systems, etc. Where can Siri go? I want to see those billions put to work and keep Apple a growth company. Vertically integrate more of my life... please. (Long Apple of course.)
~admitted Fanboy since BSD adoption~
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~admitted Fanboy since BSD adoption~
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post #7 of 10
YEEEESSS! I am so happy with Apple's response! Looks like SJ is back in spirit!
post #8 of 10

Maybe Apple should offer to transfer funds from overseas, so that Greenlight becomes liable for Taxation and can leave them to explain why paying 35% in tax to the Federal Government is good for shareholders.

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post #9 of 10

This is one of those situations where I truly wish that Steve Jobs was still alive and I was the fly on the wall in the room where SJ and Einhorn are alone together.1bugeye.gif

"You can't fall off the floor"   From 128k Mac to 8GB MBP

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"You can't fall off the floor"   From 128k Mac to 8GB MBP

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post #10 of 10
Quote:
Originally Posted by wordguru View Post

I would like to think Apple can offer more in shareholder value than simply offering 2% dividend hike too.

 

Well, let's see.... I was late to buy shares in the game (didn't really have money for stock when Apple was trading at $15), but my li'l bloc is already worth 500% of my initial investment (even with the latest hit). I'm not feeling slighted by management.

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