A U.S. Federal Court Judge has rued in favor of David Einhohorn’s lawsuit against Apple. The ruling effectively blocks an upcoming proxy vote that was slated to take place on February 27th.
U.S. District Court Judge Richard Sullivan granted Einhorn’s motion for a preliminary injunction against the upcoming shareholder vote, reports Reuters.
“This is a significant win for all Apple shareholders and for good corporate governance,” Einhorn said, according to Financial Times reporter Tim Bradshaw.
Einhorn’s Greenlight Capital sued Apple in early February because Apple had bundled more than one item into a proposition that was scheduled to be up for vote at the company’s annual shareholder’s meeting. The proposal, dubbed “Prop 2,” contained an article that would revoke the ability of Apple board members to issue preferred stock. The proposal would instead put the power to do that into the hands of the company’s shareholders. Einhorn is seeking the issuance of perpetual preferred stock that pay out higher than normal dividends, something that would be difficult to do if Prop 2 were to pass.
Einhorn made a plea to shareholders via teleconference on Thursday, floating the idea of “iPrefs,” that would pay out a quarterly dividend of 50 cents, or $2 per year. He says Apple could enhance the program over time and ultimately offer 5 iPrefs per share of common stock. This would double the current dividend rate and return some $47 billion of the company’s ever-increasing $137 billion cash pile.