Judge Blocks Vote on Proposal 2 at Next Week's Apple Shareholder Meeting

Discussion in 'MacRumors.com News Discussion' started by MacRumors, Feb 22, 2013.

  1. macrumors bot

    MacRumors

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    #1
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    A judge has decided to block a vote on Question 2 at Apple's annual shareholder's meeting next week, according to a report from Reuters.

    Hedge fund Greenlight Capital, a major shareholder of Apple stock, filed a lawsuit earlier this month asking that Apple be prevented from bundling a number of proposals into one ballot question at the shareholders meeting. The firm argued that the bundling of three separate corporate governance proposals into one question was in violation of SEC rules.
    Proposal 2 contains language relating to the term of office of the board of directors, language about the board's ability to issue preferred shares of AAPL stock without shareholder approval, and the establishment of a par value for the company's common stock.

    Apple CEO Tim Cook called the lawsuit a "silly sideshow" and "a waste of money for all involved", but the judge presiding over the case disagreed. Apple issued a statement in early January saying it was in "active discussions" about ways to return cash to shareholders as Greenlight head David Einhorn has requested.

    Update: AllThingsD has the text of the judge's ruling.

    Update 2: Apple has withdrawn Proposal No. 2 from its proxy statement, issuing this statement:
    Article Link: Judge Blocks Vote on Proposal 2 at Next Week's Apple Shareholder Meeting
     
  2. macrumors 6502

    Joined:
    Apr 26, 2011
    #2
    can someone explain to me like a 9 year old on what the hell is going on?

    how about explain it to me like a 5 year old?
     
  3. macrumors 68020

    Squilly

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    PA
    #3
    It's clear Apple doesn't like to lose...

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    Apple was sued and lost.
     
  4. macrumors regular

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    Jan 25, 2013
    #4
    In as simple of wording as possible - Apple tried to use some trickery on a shareholders vote. A judge deemed it a no go, as it violated rules of the securities and exchanges commission (SEC).
     
  5. macrumors 6502a

    Joined:
    Jul 15, 2010
    #5
    http://dealbreaker.com/2013/02/davi...ty-much-all-the-preferred-stock-in-the-world/

    basically Einhorn thinks Apple should worth much more than it is right now. In order to reflect that he wants Apple to issue a ton of prefer stocks. Apple thinks that is crazy.
     
  6. macrumors 68020

    ouimetnick

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    #6
    This is what I got from reading the article.
     

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  7. macrumors regular

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    May 20, 2006
    #7
    Time for a serious share buyback.
     
  8. macrumors 6502

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    Aug 17, 2012
    Location:
    Toronto
    #8
    as someone who understands nothing about this kind of system, what would it take for apple to become private? could it do it legally within the next 5 years? 10?
     
  9. macrumors 68020

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    California
    #9
    Einhorn sticking it where it doesn't belong again....
     
  10. macrumors P6

    Peace

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    #10
    It would take a lot more cash and securities than Apple has.
     
  11. macrumors 6502

    Joined:
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    #11
    What the... That's it! Einhorn is Finkle! Finkle is Einhorn! Einhorn is a man! Oh, my GOD! Einhorn is a man!
     
  12. macrumors member

    Joined:
    Jul 5, 2012
    #12

    It would generally take a large private equity group who was able to raise roughly 20-40% MORE than the current market value of the company they wanted to take private. In this case, the group would have to come up with 500 to 600 billion dollars based on today's closing price.
     
  13. MTL18, Feb 22, 2013
    Last edited: Feb 22, 2013

    macrumors regular

    Joined:
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    #13
    Apple would have to come up with enough money to buy it out of the stock market. This typically comes at a premium as well.

    AAPL currently has a market valuation of 425 billion dollars. Therefore, one could postulate that Apple would need to come up with over 500 billion in raw cash in order to take it private (assuming AAPL's market cap falls tremendously as well).

    Over the next 5 or 10 years, it is tough to tell. If Apple can continually bank 50 billion per year while having it's stock grown 0% YOY (close to where we are at today), than certainly.

    Remember though, Apple is at a low cycle in it's P/E valuation. It has dipped into the 10/11 range before, but has always rebounded back into the low 14s. At this point in time, it seems unlikely, but anything is possible.
     
  14. macrumors 6502

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    #14
    Apple innovates in the courtroom:D
     
  15. macrumors 65816

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    Der Wald
    #15
    The best judicial decision money can buy. The sharks see the pile of cash and will do anything to get it. Einhorn represents everything that is wrong with our financial system. Pretending to be doing this on "behalf of the shareholders". As a shareholder I would much rather have Apple control what they do with THEIR money than some sleazy shark....
     
  16. macrumors regular

    Joined:
    Jan 25, 2013
    #16
    I found this report interesting. The investors and banksters that sent us into 2008 now want to tell the most valuable company in the world (that built it's value during their recession) what to do? And a judge says .... sure...

    What a piece of junk system! My 0.02
     
  17. macrumors 68000

    iGrip

    Joined:
    Jul 1, 2010
    #17
    Apple management is out of control. The BOD needs to check them. Hard.

    If they don't, the BOD will be RIP. The shareholders own the place. Lock, stock and barrel. The BOD serves at the pleasure of the shareholders, and the management serves at the pleasure of the BOD.

    Who the hell do these guys think they are? They act like they own the place instead of being merely employees.

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    It would take a private person or entity (or a team of such persons and entities) to offer a high price to buy all outstanding shares from the Hedge Funds who currently own them. Such a deal would be approved by the BOD. Then the shares would be purchased by the takeover person/people/entity/entities, who would then own Apple just like you own your car.

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    Ummmm.......Apple's cash ownership is irrelevant. The entity would not be buying its own stock in order to "go private".

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    It is not Apple's money. The money belongs to you (a tiny bit) and to the sleazy shark (much of it).

    What you want is for Apple to control YOUR money, instead of you controlling it. Fair enough, that is why you invested.

    But don't worry about some sleazy shark controlling your money, or about them controlling Apple's money.
     
  18. Rocketman, Feb 22, 2013
    Last edited: Feb 22, 2013

    macrumors 603

    Rocketman

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    Claremont, CA
    #18
    This isn't a conspiracy on either side. The issue hinged on "shareholder confusion" (silly given the percentage of institutional ownership), that putting three different issues into a single proposal might cause.

    Confusion or not, the fact such different proposals were combined into one, is what the judge took note of, makes voting for what you want or don't want more difficult and unlikely, not "easier".

    1. Set a par value
    2. Eliminate Preferred stock (unless another vote reinstates it)
    3. Management rule

    Notice has been given on Proposal 2, so at the meeting they should bifurcate it to the three issues, take votes and show the results of those votes to the judge for affirmation.

    Is that easy enough for a 5th grader?

    Rocketman

    As for Apple going private, it is entirely practical. With the $500B market cap and the $137B in cash they could easily do a LBO. Every bank on the planet wishes they were lending Apple money. At free cash flow of about $20B a quarter and rising, they could pay off all debt in about 5 years or less. Apple SHOULD go private IMHO.
     
  19. macrumors 65816

    Joined:
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    #19
    Why would Apple want to do though?
     
  20. macrumors G5

    nagromme

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    #20
    I don't know whether Greenlight is right about the preferred stock (and I don't much care) but it certainly sounds like they're right about the inappropriate bundling.

    Follow the rules!

    I say, keep the cash and use it in future when the strategic moment comes. Rather than giving it to Greenlight OR lawyers!

    Anyone worried about the stock price should be worried about stock manipulation (and media ad-baiting) affecting the perception of the company's very real success. They shouldn't be worried about counter-manipulating the stock. Get the facts out there--be a voice of reason. That shouldn't be as rare as it is.

    Here on an Internet forum, is there really any other way? :)
     
  21. macrumors 6502a

    Kaibelf

    Joined:
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    Location:
    Chicago, IL
    #21
    So that fools like Einhorn don't try to decide what Apple does based on his armchair quarterbacking, and Apple is free to actually plan its own destiny. If going into the phone business or creating tablets was up to a vote, do you think people like him would have seriously said yes? They would have balked at the risk.
     
  22. macrumors 6502

    Joined:
    May 22, 2003
    #22
    Asking a judge to force Apple to allow individual votes instead of bundling them together to reduce likelihood of having them pass is wrong? If anything this is a win for shareholder rights. You should be happy since large companies routinely steamroll small shareholders' interests.
     
  23. Rocketman, Feb 22, 2013
    Last edited: Feb 22, 2013

    macrumors 603

    Rocketman

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    #23
    Their reasoning for issuing preferred stock with a perpetual dividend, provided to each shareholder, is to provide one more pipeline of capital and income to shareholders.

    The Apple BoD has determined a common stock dividend is sufficient, stock buy backs are sufficient, and the capital they have in the form of cash is serving a valuable purpose to protect from catastrophie, to invest in supply chain which shockingly few companies do at all, and buying firms on a regular basis. Apple currently only has common stock.

    In this "recession", companies and investors generally have a high cash position, so why not Apple too? It is to scale.

    Apple's recent high water mark was about $700B in market cap so the $137B in cash is only 20%. What percentage of your overall assets are in something you can sell in 30 days or less? Assume you can sell a house or building at "some price" within that time frame.

    Rocketman
     
  24. macrumors 68040

    Bubba Satori

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    B'ham
    #24
    Hi Tim.
     
  25. macrumors G5

    Rogifan

    Joined:
    Nov 14, 2011
    #25
    Can someone remind me again what's good about hedge funds?
     

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