How does Apple Inc. respond to a public campaign by one of its best-known investors, who happens to be a widely followed hedge fund manager, against one of its shareholder proposals
Diplomatically, it seems.
Apple said in a statement on Thursday afternoon that it would continue to evaluate ways of returning some of its $137 billion cash pile to investors, after David Einhorn called on fellow stockholders to reject the company’s plan to eliminate a kind of preferred stock.
The hedge fund magnate, who bolstered his threat by suing Apple in federal court in Manhattan, has asked the iPhone maker to consider issuing preferred shares to existing investors as a way to make use of its enormous war chest.
In its response, Appe said it would continue to evaluate Mr. Einhorn’s idea, which the investor has raised in the past. And the company added that it could still implement the proposal even if its own plan to eliminate certain kinds of preferred shares succeeds.
The main point of Apple’s response appears to be this: “Apple’s management team and Board of Directors have been in active discussions about returning additional cash to shareholders.â€
Read the full statement below:
By early last year, Apple’s cash balance had built to a point beyond what we needed to run our business and maintain flexibility to take advantage of strategic opportunities, so we announced a plan to return $45 billion to shareholders over three years. As of next week we will have executed $10 billion of that plan.
We find ourselves in the fortunate position of continuing to generate large amounts of cash, including $23 billion i! n cash flow from operations in the last quarter alone.
Apple’s management team and Board of Directors have been in active discussions about returning additional cash to shareholders. As part of our review, we will thoroughly evaluate Greenlight Capital’s current proposal to issue some form of preferred stock. We welcome Greenlight’s views and the views of all of our shareholders.
As a part of our efforts to further enhance corporate governance and serve our shareholders’ best interests, Proposal #2 in our proxy includes some recommended changes to our articles of incorporation. These changes were recommended independently of Greenlight’s proposal and would not preclude Apple from adopting their concept. Contrary to Greenlight’s statements, adoption of Proposal #2 would not prevent the issuance of preferred stock. Currently, Apple’s articles of incorporation provide for the issuance of “blank check†preferred stock by the Board of Directors without shareholder approval. If Propoal #2 is adopted, our shareholders would have the right to approve the issuance of preferred stock. As such, Proposal #2 has the support of many of our shareholders.
We remain committed to having an ongoing dialogue with our shareholders to get perspectives around return of capital and driving shareholder value.
