Judge Rules In Favor Of Greenlight Capital, Prevents Apple From Limiting Preferred Stock

Hedge fund heavyweight David Einhorn just had a decisive victory in his crusade against Apple's limited stock options.

Hedge fund heavyweight David Einhorn just won a decisive victory in his crusade against Apple’s limited stock options.

A New York judge has ruled in favor of David Einhorn’s Greenlight Capital and blocked an AAPL shareholder vote that would limit Apple’s ability to give preferred stock options to investors. The ruling comes after Greenlight held a meeting yesterday with shareholders to explain the ideas behind its “iPrefs” stock proposal.

Apple shareholders were scheduled to vote on limiting preferred stock next Wednesday, but a preliminary injunction has been granted that stops the vote from taking place.

Greenlight Capital recently sued Apple for bundling three proposals in violation of the SEC, one of which related to limiting the company’s ability to issue preferred stock dividends. Greenlight essentially wants Apple to give dividends at a constant value that would end up paying more back to investors.

Apple responded with a public statement saying the company “will thoroughly evaluate Greenlight Capital’s current proposal to issue some form of preferred stock.” Tim Cook dismissed the lawsuit as a “silly slideshow,” saying, “What this proposal is about is about the rights of shareholders. I want to be very clear on this: it’s not about whether Apple returns additional cash, or how much, to shareholders. It’s not about the mechanism to return it.”

That “mechanism” will hopefully be decided at Apple’s shareholders meeting next week.

  • Paul Burt

    If I’m not mistaken, doesn’t the current method for issuing preferred stock require approval from Apple’s board of directors? So this proposal that was squashed would change it to require approval from Apple’s shareholders. I don’t understand how that’s supposed to be worse for those investors. Apple is trying to give them more power. Einhorn is an idiot who just cares about draining more money out of Apple.

  • technochick

    If I’m not mistaken, doesn’t the current method for issuing preferred stock require approval from Apple’s board of directors? So this proposal that was squashed would change it to require approval from Apple’s shareholders. I don’t understand how that’s supposed to be worse for those investors. Apple is trying to give them more power. Einhorn is an idiot who just cares about draining more money out of Apple.

    As I understand it yes. Einhorn probably does like it because it means more folks to convince and that’s harder.

    And he’s not an idiot. His job is to make money and this plan would. And he has a real fear in the bundling issue. If someone doesn’t like one of the other pieces they would vote no and the power to refuse to refer prefs stays with the board.

    Well okay he is an idiot in the sense of not thinking we the shareholders would nail him for who he is nd know his real motived. It is the age of the Internet.

About the author

Alex HeathAlex Heath is a senior writer at Cult of Mac and co-host of the CultCast. He has been quoted by the likes of the BBC, KRON 4 News, and books like "ICONIC: A Photographic Tribute to Apple Innovation." If you want to pitch a story, share a tip, or just get in touch, additional contact information is available on his personal site. Twitter always works too.

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