Apple fires back at Einhorn, reveals high-level meeting details

NEW YORK Thu Feb 14, 2013 4:38am IST

Apple CEO Tim Cook speaks to the audience during an Apple event in San Jose, California October 23, 2012. REUTERS/Robert Galbraith

Apple CEO Tim Cook speaks to the audience during an Apple event in San Jose, California October 23, 2012.

Credit: Reuters/Robert Galbraith

Related Topics

Stocks

   

NEW YORK (Reuters) - David Einhorn tried to dissuade Apple Inc (AAPL.O) last week from eliminating its ability to issue preferred shares at will, saying the need to first obtain shareholder approval would be an unnecessary roadblock to any such future plans, the iPhone maker said in a court filing on Wednesday.

Apple Chief Financial Officer Peter Oppenheimer described in the filing how, during a discussion with Einhorn and Apple CEO Tim Cook on February 6, Einhorn opposed the so-called "Proposal No. 2", which would remove an existing system for issuing preferred shares at the company's sole discretion, without having to get shareholders' approval.

Einhorn "viewed requiring shareholder approval for his ... proposal as a 'roadblock that was not needed'," Oppenheimer declared 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 in his legal declaration.

Einhorn did not immediately respond to requests for comment.

Einhorn's Greenlight Capital sued Apple last week in U.S. District Court in Manhattan, hoping to block a February 27 shareholders' vote on Proposal No. 2.

Instead, Einhorn wants Apple to issue perpetual preferred stock with a 4 percent dividend to existing shareholders, part of his broader pitch for the company to send more of its $137 billion cash hoard investors' way.

Apple has said it will carefully consider that "creative" idea.

In Wednesday's motion, Apple also challenged Einhorn's assertion that it had "bundled" three different proxy proposals into one, in violation of U.S. Securities and Exchange Commission rules.

Proposal No. 2 also seeks to amend Apple's articles of incorporation by providing for majority voting for directors, and establishing a par value for Apple stock.

"Bundling occurs when discrete, material proposals are combined in a manner that puts shareholders to an unfair choice," Apple said. "That is not the case here."

Apple said in Wednesday's motion it had initiated the proposal in response to a report by influential proxy adviser Institutional Shareholder Services. The firm said this week that so-called "blank check" preferred stock -- issued without shareholder approval -- could be abused as a takeover defense.

"This report reflected a view widely held by shareholder advocates that corporate boards should not have 'blank check' authority to issue preferred shares," Apple said.

A hearing in the case is scheduled for February 19.

The case is Greenlight Capital LP, et al., v. Apple Inc., U.S. District Court, Southern District of New York, 13-900. (Reporting By Nate Raymond in New York; Editing by Leslie Gevirtz)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared
A staff of a China Mobile shop explains a function of the iPhone 5s to a customer in Beijing January 17, 2014. REUTERS/Kim Kyung-Hoon/Files

Apple revenue lags Street's view despite strong China growth

Apple posted a smaller-than-expected 6 percent rise in quarterly revenue on Tuesday, but revenue surged 28 percent in greater China despite stiff competition in its third-largest market.  Full Article 

TECH SHOWCASE

Privacy Lawsuit

Privacy Lawsuit

Google must face U.S. privacy lawsuit over commingled user data.  Full Article 

New Launch

New Launch

China's Xiaomi announces latest flagship Mi 4 smartphone.  Full Article 

Class Action

Class Action

Google must face class action over kids' in-apps purchases.  Full Article 

Black Hat Conference

Black Hat Conference

Talk on cracking Internet anonymity service Tor canceled.  Full Article 

Nano-Printing

Nano-Printing

Monet masterpiece shrunk down to the size of dust mite.  Video 

Losing Steam

Losing Steam

With sales sputtering, Apple's iPad looks to IBM alliance  Full Article 

N.Y. Forgery Trial

N.Y. Forgery Trial

Zuckerberg to testify at N.Y. forgery trial - prosecutors  Full Article 

Management Changes

Management Changes

BlackBerry names ex-Sybase executive as chief operating officer.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage