Apple Inc. has introduced more innovative consumer products than perhaps any other company has over the past decade: the iPod, the iPhone, the iPad.
Now the hedge fund manager David Einhorn wants the company to roll out what he calls “iPrefs,†which he say could produce $61 a share in additional benefits for investors.
It’s a cutesy name for the class of perpetual preferred shares that Mr. Einhorn has called upon the technology giant to roll out as a way to deliver more cash to its shareholders. And for over an hour on Thursday, the Greenlight Capital chief patiently walked listeners through his argument about why those securities make the most sense for returning the company’s $137 billion cash hoard to what he said were its rightful owners.
Flipping through a voluminous PowerPoint presentation, Mr. Einhorn argued that his idea bore merit and deserved shareholder support. He also explained how iPrefs work: Apple would issue one preferred share, carrying a quarterly dividend of 50 cents each, for each outstanding common share.
He conceded that the idea was unusual. But he argued that it was a fresh way to reward shareholders while letting Apple hold onto a still-substantial “rainy day†fund.
“We know they embrace innovation and can recognize it when they see it, even if it isn’t the kind of innovation people usually think of when they think of Apple,†Mr. Einhorn said.
“We hope Apple agrees with us when we say that iPrefs are an innovative idea whose time has come.â€
The conference call came after several current and former investors in Greenlight called upon Mr. Einhorn to halt his fight, which has included suing the company for what the hedge fund manager called an improper bundlin! g of several shareholder initiatives. The proposal Apple’s proxy includes the elimination of the company’s ability to issue preferred shares without shareholder consent.
Calpers, the big California pension fund, has urged shareholders to support the so-called proposal 2, arguing that it actually promotes good corporate governance.
A federal district court judge is weighing issuing a preliminary injunction on Apple’s shareholder vote on Feb. 27, as he prepares a ruling on whether Apple violated securities rules. The judge, Richard Sullivan, has indicated that Mr. Einhorn’s lawsuit appears likely to succeed as a matter of law.
David Einhorns Apple Inc. iPrefs Presentation by
