| SAN FRANCISCO
SAN FRANCISCO Feb 8 Apple Inc's move
to eliminate from its charter the ability to issue preferred
shares without first getting shareholder approval has received
the support of the largest public pension fund in the United
States, and an influential proxy firm.
Hedge Fund manager David Einhorn's Greenlight Capital is
suing Apple to get it to deploy its $137.1 billion cash pile
more effectively by issuing preferred stock, which he says is
superior to dividends or share buybacks.
His lawsuit, filed in U.S. District Court in Manhattan on
Thursday, targets the proposal by Apple to remove from its
charter "blank check" preferred stock.
That particular proposal is "bundled" with two other
unrelated proposals, but will be collectively decided in a
single vote, which Einhorn objected to.
The California Public Employees Retirement System, the owner
of 2.7 million Apple shares, and proxy voting firm ISS Proxy
Advisory Services, recommended on Friday that investors vote for
Apple's proposal. Calpers had indicated its support for the
proposal in a filing earlier this week, but reiterated its
backing after Einhorn filed his suit.
All shareholders should have a vote," Anne Simpson, Calpers
Senior Portfolio Manager and Director for Corporate Governance
said on CNBC. "We don't want the board cutting a deal on the
side with a hedge fund out of fear of a lawsuit that will cancel
the annual meeting."
"This is a big issue that needs to be thought through
carefully, and we want the board to come to all shareholders and
give a chance to have their voice heard," she added.
Apple is asking shareholders at its annual meeting on Feb.
27 to vote on the proposal. ISS said its policy supported the
elimination of "blank check" preferred shares due to their
potential to be misused as a takeover defense because they can
be issued at the company's discretion.
"Moreover, should the board decide at some future date that
an issuance such as Greenlight has proposed makes sense, and can
demonstrate the benefit to shareholders, obtaining the requisite
shareholder support to reinstate the provision is not likely to
be an insurmountable obstacle," ISS said in a research note.
But the firm, which issues recommendations on how
shareholders should vote on proxy proposals, also believes the
"bundling" of proposals is not in the best interest of
Einhorn wants Apple to separate the three issues that are
part of Proposal 2, which includes the "blank check" proposal.
He holds 1.3 million Apple shares worth about $600 million
at current values.
Greenlight Capital said it was disappointed ISS did not
recognize the unique circumstances surrounding Apple, which has
$137 billion in cash and marketable securities.
Einhorn and other investors have accused Apple of not
managing the cash and marketable securities effectively,
limiting returns to shareholders.
Greenlight also reiterated on Friday its call to Apple
shareholders to vote against the proposal.