Apple has officially responded to Greenlight Capital calling it out on its proposal to eliminate preferred stock. While Apple has begun paying a quarterly dividend, some investors want more. Greenlight Capital’s David Einhorn says that “preferred shares would be a way to reward investors without putting the company at risk.”
Apple has responded to Greenlight Capital regarding the issuing of preferred stock, and the stock market has reacted quite favorably as seen above.
Apple’s statement read as follows:
CUPERTINO, Calif.–(BUSINESS WIRE)–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 in 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 Proposal #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.
9to5Mac says, that Greenlight Capital founder David Einhorn appeared on “Squawk Box” today to defend his decision to file suit in New York federal court against Apple over a proposal, dubbed “Proposal 2,” that would allegedly stamp out preferred stock in the company’s proxy, claiming the proposal does not adhere to regulatory rules
You can read Bloomberg’s full interview with Einhorn about how he feels Apple should handle its cash here.