In the recent lawsuit against Apple, brought by David Einhorn and Greenlight Capital, which contends that Apple’s desire to eliminate their Preferred Stock payouts to stockholders in the form of a proposal to change the charter of the company itself. Securities and Exchange Commission rules state that a company cannot ‘bundle’ an undesirable proposal with other proposals to force a vote on the undesirable one. It was this that Apple was attempting to do. In one stockholder vote, Apple wanted to group into a single vote proxy proposals that would require a majority rule in voting for company directors and an establishment of a par value for each Apple stock share with the last being the one that David Einhorn as well as others had a problem with.
Einhorn wanted Apple to keep offering preferred stocks as he is one of the major stockholders in the company and preferred stock pays out more than other investment options. Some believe that Einhorn’s lawsuit is a waste of time with the organizers of California’s retirement plan for public employees being a big blow to Einhorn’s efforts. Anne Simpson is the Senior Portfolio Director believes that a lawsuit would delay the stockholder’s meeting and vote and she disagrees with Mr. David Einhorn’s efforts.
Others believe that he has a point in that Apple is one of the most cash-rich organizations on the planet and that they are being ‘stingy’ with investors by refusing to pay out in preferred stocks. One individual, identified only as Mr. G Best argues that he made a wager that Einhorn would pull out of the lawsuit before it ever entered a courtroom. Unfortunately for him, a judge agreed with Einhorn and allowed the injunction delaying the stockholder’s vote. About the wager, Best paid. Proxy service came to his rescue however and Apple decided to drop the bundling after the judge favored Einhorn.
That same week, Einhorn dropped the lawsuit against Apple, citing their willingness to separate the issues into more than one vote.
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