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February 8, 2013, 5:40 PM
ISS Sides with Apple Over Einhorn on ‘Blank Check’ Proposal
By Telis Demos
Shareholder adviser ISS Proxy Advisory Services has urged investors to vote for an Apple Inc. proposal to eliminate the company’s power to issue preferred stock without shareholder approval, after hedge-fund manager David Einhorn of Greenlight Capital Inc. challenged Apple’s proposal earlier this week.
“ISS policy supports the elimination of ‘blank check’ preferred shares, because of their potential to be misused in a takeover defense,” the firm said in a note published on Friday. Also, the firm said, if Apple eventually decided it wanted to issue such shares, obtaining shareholder support wasn’t likely to be “an insurmountable obstacle.”
But ISS also said that Apple should not have “bundled” for a vote the preferred stock provision with other measures it is proposing to shareholders. “ISS generally believes bundling of proposals is not in the best interest of shareholders,” it said.
Mr. Einhorn on Thursday published a letter arguing that Apple shouldn’t move to require shareholder approval to issue preferred stock. He also sued the company on the basis that it illegally bundled the proposal.
Apple on Thursday said passage of the proposed measure wouldn’t prevent Apple from issuing preferred stock in the future, and that its leadership has been in active discussions about returning more cash to shareholders. The statement didn’t address the merits of Greenlight’s lawsuit.
In a statement on Friday in reaction to ISS, Mr. Einhorn said: “We are pleased that ISS recognizes that Apple’s bundling of proposals in its proxy is not in the best interest of shareholders. However, we are disappointed that they did not recognize the unique circumstances surrounding a company with $137 billion of cash on its balance sheet and no realistic potential for being a takeover target. All shareholders should send Apple’s Board a clear message by voting against Proposal 2.”
Mr. Einhorn has urged Apple to consider issuing dividend-paying preferred stock as a way to return the company’s cash to shareholders. Greenlight and its affiliates own over $600 million worth of Apple stock.
wsj.com |
