A U.S. judge ruled today in favor of stopping a vote by Apple shareholders on a proposal to change the company’s policy for issuing preferred stock.
Earlier this month Apple investor David Einhorn’s hedge fund Greenlight Capital filed a lawsuit against Apple, believing that the company was planning to remove preferred shares (higher ranking shares than typical common stock) with a change to its charter within a proposal.
Some investors are worried about Apple’s 26 percent stock price decline over the last six month, as well as its mountain of cash ($137 billion). The hedge fund has previously urged Apple to issue preferred stock for the purpose of returning more of the company’s accumulated cash to shareholders. (So basically, Einhorn feels like shareholders are getting screwed.)
The lawsuit takes issue with a portion of the proposal that would eliminate the company’s power to issue preferred shares without a shareholder vote and claims that its in violation of SEC rules — a claim Apple flatly denied. Today, U.S. District Judge Richard Sullivan stopped the vote on the proposal, which was scheduled to take place February 27 during the company’s annual stockholders’ meeting.
Greenlight Capital issued the following statement about the rule:
This is a significant win for all Apple shareholders and for good corporate governance. We are pleased the Court has recognized that Apple’s proxy is not compliant with the SEC’s rules because it bundles different matters in Proposal 2. We look forward to Apple’s evaluation of our iPref idea and we encourage fellow shareholders to urge Apple to unlock the significant value residing on its balance sheet.
Apple image via Shutterstock
Via The Verge