Investment fund Greenlight Capital, controlled by the American billionaire David Einhorn, won a first confrontation with Apple in court, after the judge blocked a vote scheduled by the company for the shareholders’ meeting on 27 February, Bloomberg. One of the issues placed by Apple on the agenda of the meeting on Wednesday would have been to make the process of issuing a new class of preferred shares more complicated by introducing shareholders’ vote in the procedure. A judge of a Manhattan court approved Einhorn’s request to block the shareholder vote on the issue.
“We are disappointed by the court decision. The proposal is part of our effort to improve our corporate governance and serve the interests of our shareholders. Unfortunately, because of today’s decision, shareholders will not vote on the proposal at the annual meeting,” says in a Apple press release.
Einhorn is thus one step closer to the $137.1 billion reserves accumulated by Apple. The billionaire attacked the company in court to get the support of shareholders, with the ultimate goal of determining the company to distribute a portion of reserves among shareholders either by share redemption or by issuing a new class of preferred shares with substantial dividend. Apple shares fell by 36% since September to date, because of fears that the company’s growth prospects have deteriorated.
“It’s a shame we have to resort to justice, but we enjoy it sent a strong message to management, they should consider an alternative strategy for using the reserves,” said the president of Capital Advisors Fund, one of Apple shareholders who supported the Einhorn’s initiative.
Apple was faced in the past several years with the discontent of shareholders on how the company uses cash reserves. Having been close to bankruptcy in the 90s, before the return of Steve Jobs at the helm, Apple has accumulated impressive cash reserves due to the success of the products developed under his supervision, such as iPod, iPhone and iPad.
The company has tried to resolve differences with shareholders last year, announcing dividend distribution including from reserves, but investors led by Einhorn want more substantial measures.
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