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Apple CEO calls Einhorn lawsuit a ‘sideshow’

Cook says the board is in ‘very active discussions’ on how to share more of its cash
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First Published: Tue, Feb 12 2013. 10 38 AM IST
The lawsuit contends Apple violated Securities and Exchange Commission rules that prohibit companies from ‘bundling’ unrelated matters into a single proposal for a shareholder vote. Photo: AFP
The lawsuit contends Apple violated Securities and Exchange Commission rules that prohibit companies from ‘bundling’ unrelated matters into a single proposal for a shareholder vote. Photo: AFP
Updated: Tue, Feb 12 2013. 09 53 PM IST
San Francisco: Apple Inc CEO Tim Cook called David Einhorn’s lawsuit against his company a “sideshow” but said on Tuesday the board is carefully considering the star hedge fund manager’s proposal to issue preferred stock, calling it “creative.”
Waving off claims that Apple is clinging to a “Depression-era” mentality, Cook said the board is in “very active discussions” on how to share more of its $137 billion hoard of cash and marketable securities.
David Einhorn is suing Apple as part of a wider effort to get Apple to share more of its cash pile, one of the largest hoards in the technology industry. Einhorn wants the iPhone maker to issue perpetual preferred shares that pay dividends to existing shareholders, arguing that such a vehicle would be superior to dividends or share buybacks.
His clash with Apple revolves around a proposed change to its charter that would eliminate the company’s ability to issue “blank check” preferred stock at its discretion. Apple is recommending shareholders vote in favor of that at their annual meeting on 27 February.
The lawsuit, filed in the US district court of Southern District of New York, objects to how that charter change is bundled together with two other corporate governance-related proposals in “Proposal 2”, in the proxy document for the annual meeting.
“This is a waste of shareholder money and a distraction and not a seminal issue for Apple. That said, I support Prop 2. I am personally going to vote for it,” Cook told investors at Goldman Sachs’ annual technology industry conference in San Francisco.
The conflict over Prop 2 “is a silly sideshow,” he added.
Cook also touched on Apple’s acquisition strategy, saying that the company has looked at more than one large acquisition but each time it didn’t pass the company’s internal test.
But it could do one in the future, if the technology fits.
“We have the management talent and depth to do it,” he said. “We don’t feel the pressure to go out and acquire revenue.” REUTERS
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First Published: Tue, Feb 12 2013. 10 38 AM IST
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