Judge blocks shareholder vote on Apple proposal
NEW YORK A federal judge is blocking Apple (AAPL) from conducting a shareholder vote on a package of governance proposals, handing a victory to a rebel investor who is trying to persuade the company to share more of its cash with its investors.
U.S. District Judge Richard Sullivan in New York ruled Friday that Apple was wrong to bundle four amendments to its corporate charter into one proposal for a vote at next Wednesday's annual meeting. Shareholders should get to vote on the amendments separately, he said.
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Greenlight Capital, a hedge fund run by Wall Street maverick David Einhorn, sued Apple over the proposal because it would remove the board's ability to issue preferred stock without shareholder authorization. Einhorn wants Apple to issue "iPrefs," preferred shares with a guaranteed dividend, as a way of committing the company to sharing its massive profits with shareholders.
Einhorn has been trying to rally Wall Street to vote against the Apple proposal as a way of showing their displeasure with the company's capital-allocation policies. Apple has $137 billion in the bank, an unheard-of sum that grows by about $40 billion every year. Investors almost universally want Apple to hand out at least some of that cash, but Einhorn hasn't gotten much support for his "iPrefs" idea or his "No on Proposal 2" campaign.
Apple and Greenlight didn't immediately respond to requests for comment Friday.
Last week, Apple CEO Tim Cook said the company's proposal puts more power in the hands of shareholders, making it difficult to understand why a shareholder would fight it. Calling Greenlight's campaign a waste of time, Cook said Apple wouldn't squander money by mailing letters to shareholders to persuade them to vote for the proposal.
The California Public Employees' Retirement System, the country's largest pension fund, had said it would vote for Apple's proposal, because it would have strengthened shareholder rights. Among other measures, it would let shareholders vote against directors.