Hedge fund manager David Einhorn of Greenlight Capital can claim his first victory in his fight to get some of Apple’s $137 billion cash pile. US District Court Judge Richard Sullivan today granted Einhorn’s motion to prohibit Apple from putting to a vote a shareholder proposal that Einhorn says would restrict Apple’s ability to issue preferred stock.
Apple shareholders are scheduled to vote on the proposal on Feb. 27 at Apple’s annual investor meeting. It’s unclear whether Apple will appeal the court decision.
Einhorn wanted Apple to drop the proposal because he has suggested that Apple return cash to investors through “iPrefs,” which are preferred shares that would pay a dividend every quarter “forever” to investors who own them. In a conference call yesterday with the public, Einhorn said iPrefs would give Apple shares a value of $480, higher than where it is trading now.
In court, Einhorn argued that Apple had inappropriately combined several issues into one shareholder proposal, which wasn’t allowed by the SEC. Earlier this week, Sullivan indicated he was leaning toward Einhorn’s thinking.
Apple has said it is studying Einhorn’s proposal, although CEO Tim Cook also called the Einhorn matter a “silly sideshow.” Last year, it announced a plan to return $45 billion to shareholders over three years.