Judge blocks Apple shareholder vote in lawsuit

NEW YORK (AFP) – A US federal judge blocked Friday an Apple shareholder vote in response to a hedge fund lawsuit that claimed the tech giant was improperly bundling questions on a ballot.

The ruling was a win for hedge fund Greenlight Capital, which has been pressing Apple to give shareholders more of its huge cash stockpile.

The preliminary injunction ordered by Judge Richard Sullivan has no impact on Apple’s distribution of cash but prevents a vote on a proposal supported by management to make it impossible for the Apple board to issue preferred stock without shareholder approval.

Greenlight has urged Apple to issue “perpetual preferred stock” at no cost to Apple’s existing shareholders to get some of the company’s US$137 billion cash stockpile to its stockowners.

The hedge fund alleged that Apple violated US securities policies by “bundling” the proposal on preferred stock with two other shareholder-friendly measures.

Doing so forces shareholders to accept or reject all three measures together, rather than separately, which Greenlight says violates a Securities and Exchange Commission rule.

Sullivan granted the injunction, saying that the lawsuit was “likely to succeed on the merits” and that the plaintiffs, which include Greenlight and another investor, “face irreparable harm” if the vote proceed.

But the judge denied a separate request for an advisory vote on the compensation of Apple’s top executives.

Last week, Apple chief executive Tim Cook said the company was examining ways to distribute more cash to shareholders but claimed the litigation was “a silly sideshow”.

“This is a waste of shareholder money,” he said of the suit.

Cook said it was “an incredible privilege” to be in the position of deciding what to do with the company’s US$137 billion cash stockpile, and maintained that Apple will do so “deliberately and thoughtfully”.

But he maintained that the lawsuit was not about returning cash, but instead about “the right of shareholders” to authorise any special stock issue.