Apple Tells Court It Will Fight Bid to Block Shareholder Vote

$AAPL's CashApple has told the U.S. District Court in New York that it will fight Greenlight Capital's efforts to block a vote on a shareholder proposal that would require the company to get shareholder approval before issuing preferred stock. Apple filed a response to Greenlight's suit on Wednesday for an expedited hearing that is scheduled for February 19th, ahead of its February 27th annual shareholder meeting.

At issue is a suit from David Einhorn's Greenlight Capital hedge fund that wants to block Apple's proposal. Greenlight believes Apple should issue preferred stock with a perpetual dividend to current shareholders in order to return more of Apple's enormous cash hoard to its shareholders.

David Einhorn has been quite bullish on Apple, but wants the company to get serious about giving more money back to shareholders. Greenlight owns some 1.3 million shares of Apple, a stake worth some US$607.1 million at Wednesday's closing price.

Apple has argued publicly that that its proposal doesn't keep it from issuing the stock, but does require the company to seek shareholder approval before doing so. According to Apple's new court documents, as reported by Reuters, Mr. Einhorn believes this is an unnecessary impediment to Apple issuing such shares,

“Apple’s proposal only formalizes Apple’s stated commitment to seek shareholder approval if it wants to issue preferred shares,” Apple wrote in its filing. “[Greenlight] will suffer no injury, much less irreparable injury, absent the preliminary injunction.”

Apple further argued that its proposal was in the best interest of shareholders, and therefore the public, by empowering those shareholders to have a say on this issue. Greenlight's "proposed injunction would harm the public interest," Apple wrote.

Apple CFO Peter Oppenheimer included his own statement in Apple's court filing, saying, “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."

Under a court agreement to expedite the trial for this lawsuit ahead of Apple's annual shareholder meeting, Apple's filing was due on Wednesday. Greenlight now has until Friday, February 15th to file its response to Apple's response, and a hearing will be held on the 19th.

Apple was hit by a shadow suit on Wednesday from an investor in Pennsylvania with goals similar to Greenlight's.

$AAPL ended the day slightly down at US$467.01, a loss of $0.89 (-0.19 percent), on light volume of 16.96 million shares trading hands.

*In the interest of full disclosure, the author holds a tiny, almost insignificant share in AAPL stock that was not an influence in the creation of this article.