Judge blocks Apple shareholder vote in lawsuit (Update)

Feb 22, 2013
Customers and pedestrians walk in front of the Apple store at The Grove on January 23, 2013 in Los Angeles, California. A US federal judge blocked Friday an Apple shareholder vote in response to a hedge fund lawsuit that claimed the tech giant was improperly bundling questions on a ballot.

A US federal judge blocked Friday an Apple shareholder vote in response to a hedge fund lawsuit that claimed the tech giant was improperly bundling questions on a ballot.

The ruling was a win for hedge fund Greenlight Capital, which has been pressing Apple to give shareholders more of its huge cash stockpile.

The preliminary injunction ordered by Judge Richard Sullivan has no impact on Apple's distribution of cash but prevents a vote on a proposal supported by management to make it impossible for the Apple board to issue preferred stock without shareholder approval.

Greenlight has urged Apple to issue "perpetual preferred stock" at no cost to Apple's existing shareholders to get some of the company's $137 billion cash stockpile to its stock owners.

The hedge fund alleged that Apple violated US securities policies by "bundling" the proposal on preferred stock with two other shareholder-friendly measures.

Doing so forces shareholders to accept or reject all three measures together, rather than separately, which Greenlight says violates a Securities and Exchange Commission rule.

Sullivan granted the injunction, saying that the lawsuit was "likely to succeed on the merits" and that the plaintiffs, which include Greenlight and another investor, "face irreparable harm" if the vote proceed.

But the judge denied a separate request for an advisory vote on the compensation of Apple's top executives.

Last week, Apple chief executive Tim Cook said the company was examining ways to distribute more cash to shareholders but claimed the litigation was "a silly sideshow."

"This is a waste of shareholder money," he said of the suit.

Cook said it was "an incredible privilege" to be in the position of deciding what to do with the company's $137 billion cash stockpile, and maintained that Apple will do so "deliberately and thoughtfully."

But he maintained that the lawsuit was not about returning cash, but instead about "the right of shareholders" to authorize any special stock issue.

"Frankly, I find it bizarre that we would find ourselves being sued for doing something that's good for shareholders," he said, adding that the company would likely seek shareholder approval even if not required.

Explore further: New iPhones deliver big profits for Apple (Update)

add to favorites email to friend print save as pdf

Related Stories

Rebel Apple investor tries to rally Street

Feb 22, 2013

(AP)—A Wall Street maverick who wants Apple to share more of its wealth with investors took his case to other shareholders Thursday, urging them to send management a message by voting against a company proposal at the upcoming ...

Greenlight sues Apple, with eye on cash pile

Feb 07, 2013

US hedge fund Greenlight Capital Thursday filed suit against Apple as it boosted pressure on the tech giant to unleash to shareholders the value of its huge capital stockpile.

Apple CEO Cook says lawsuit is 'silly sideshow'

Feb 12, 2013

Apple CEO Tim Cook calls a shareholder lawsuit against the company a "silly sideshow" but says he is open to looking at the shareholder's proposals for sharing more cash with investors.

After error, Apple giving investors 'say on pay'

Apr 27, 2009

(AP) -- Apple Inc. investors will get an advisory vote on executive compensation, the company said Monday, reversing an earlier announcement in which Apple said the "say on pay" proposal failed to get enough support at the ...

Yahoo shareholder pushes for its board nominees

Mar 21, 2012

(AP) -- One of Yahoo's major investors is urging shareholders to vote its four nominees on to the Internet company's board, launching a potentially nasty fight to transform the Internet company's board.

Recommended for you

Turner channels removed from Dish amid pact spat

2 hours ago

Channels such as Cartoon Network and CNN are no longer part of Dish's programming lineup as a deadline has passed for the satellite TV provider and Turner Broadcasting to renew their distribution agreement.

Verizon reports higher 3Q net income, revenue

3 hours ago

Verizon Communications Inc. on Tuesday reported higher net income and revenue in its third quarter, helped by strong wireless subscriber growth and demand for its high-speed FiOS Internet services.

Amazon, Simon & Schuster sign book retail deal

11 hours ago

Amazon has reached a deal with American book publisher Simon & Schuster, the companies said, though the e-commerce giant remains at loggerheads with France's Hachette over e-book pricing.

User comments : 0