In response to a court ruling today in favor of hedge fund manager David Einhorn, Apple has yanked a proxy proposal that would eliminate its ability to issue "blank check" preferred stock without investor approval.
Apple issued a statement concerning the ruling by U.S. District Judge Richard Sullivan, who granted Einhorn's bid to block next week's shareholder vote on the proposal:
"We are disappointed with the court's ruling. Proposal #2 is part of our efforts to further enhance corporate governance and serve our shareholders' best interests. Unfortunately, due to today's decision, shareholders will not be able to vote on Proposal #2 at our annual meeting next week."
Greenlight Capital, a hedge fund run by the famed short seller Einhorn, sued Apple on February 7, asserting that the company needed to distribute preferred stock to current shareholders and that Apple had balked at the idea when it was first discussed. Einhorn argues that issuing high-yielding preferred shares to existing shareholders would allow Apple to share the value on the balance sheet but still hold a large amount of cash.
Apple's latest proxy statement, which details items up for a vote at its February 27 shareholder meeting, had included a proposal that would eliminate such preferred stock. Einhorn's suit sought an injunction to prevent Apple from bundling that provision with several other items. Rather, he wanted each item to be voted on separately.