Judge Says Apple's (AAPL) Preferred Charter Proposal 'Cut A Little Broadly'
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Einhorn's Greenlight begins arguing for Apple (AAPL) vote injunction at hearing
February 19, 2013 2:43 PM ESTEinhorn's Greenlight Capital begins arguing for Apple, Inc. (NASDAQ: AAPL) vote injunction at hearing, according to Bloomberg headlines.... More
Einhorn's Greenlight Capital Urges Apple (AAPL) Shareholders to Oppose Proposal 2, Which Would Impede Ability to Unlock Shareholder Value
February 7, 2013 8:35 AM ESTDavid Einhorn's Greenlight Capital, Inc. announced that it is urging fellow shareholders of Apple Inc. (Nasdaq: AAPL) to oppose the Companys attempt to amend its corporate charter. Greenlight is voting AGAINST Proposal 2 in Apples proxy, which would eliminate preferred stock from Apples charter and thus restrict the Boards ability to unlock the value on Apples balance sheet. Greenlight is asking all shareholders to also vote AGAINST Proposal 2 at the upcoming Annual Meeting of Shareholders to be held on February 27, 2013.
A shareholder since 2010, Greenlight believes Apple is a phenomenal company filled with talented people creating iconic products that consumers around the world love. However, like many other shareholders, Greenlight is dissatisfied with Apples capital allocation strategy. Greenlight believes that the amendment to Apples charter in Proposal 2 unnecessarily limits the Boards flexibility to distribute preferred stock as a means of unlocking shareholder value. As such, Proposal 2 does not merit shareholder support.
We believe Apple must examine all of its options to unlock the growing value of its balance sheet for all shareholders, said David Einhorn, President of Greenlight. Over the past several months, we have had an ongoing dialogue with Apple regarding one option to do so, namely the creation of a new security, a perpetual preferred stock that would be distributed at no cost to Apples existing shareholders, and would provide an attractive, sustainable dividend while preserving Apples financial resources to pursue its business strategy.
Greenlight first described the concept at a May 2012 investment conference, where Mr. Einhorn demonstrated that Apple could unlock several hundred billion dollars of shareholder value by distributing, to existing shareholders, a perpetual preferred stock. Since May, Greenlight has had discussions with Apple on this value creation idea, but Apple rejected it outright in September 2012.
Greenlight believes that Apples proposal to eliminate preferred stock from its charter is an unprecedented action to curtail the Boards options. Greenlight is not aware of any other company that has ever taken this step voluntarily. Greenlight remains convinced that the issuance of perpetual preferred stock is a viable option for improving Apples unsatisfactory capital allocation policy.
Yesterday, in response to Greenlight notifying Apple that it intended to contest Proposal 2, management offered to re-evaluate Greenlights idea, but refused to withdraw the charter amendment to eliminate preferred stock. Greenlight is hopeful that when Apple and its advisers review the idea afresh, it will see the merits and act to unlock value for all shareholders.
Nonetheless, Greenlight believes that eliminating preferred stock from the Companys charter hinders Apples ability to implement value creating options. Mr. Einhorn continued, Apple should unlock shareholder value through the distribution of perpetual preferred stock. We ask shareholders to vote against Proposal 2, thereby expressing to Apple and its Board their support for unlocking value and significantly improving Apples current capital allocation policy.
Proposal 2 actually contains three distinct corporate governance proposals that Greenlight believes need to be unbundled... More
