Apple Files Proxy Statement on Preferred Stock
Cook made the comments during today's Goldman Sachs Technology and Internet conference.
Last week, Greenlight Capital's David Einhorn announced he was suing the iPhone maker , asking fellow shareholders to vote against Apple's proposal to do away with preferred stock, which he says restricts "the Board's ability to unlock the value on Apple's balance sheet."
Apple responded to Einhorn, putting out a statement saying it would "thoroughly evaluate Greenlight Capital's current proposal to issue some form of preferred stock."
Apple's proxy statement released today contained the following transcript form the Goldman conference:
Questioner: There was a specific proposal last week from Greenlight on Apple issuing a perpetual preferred stock. I've been getting tons of questions on what that is and do we have examples. I'm sure you've dug into this. What are your thoughts on that type of security?
Tim Cook: Well, I think it's creative, and we are going to thoroughly evaluate their current proposal. We welcome all ideas from all of our shareholders, including Greenlight, and we're going to thoroughly consider it.
Questioner: There was also a lawsuit last week through this same proposal from Greenlight related to your proxy. How do you think about that lawsuit? Where is the misunderstanding here?
Tim Cook: This is a good question because I don't think this is well understood. The disagreement centers around a proposal on Apple's proxy. We filed our preliminary proxy in December. It's called Prop 2, and what this proposal is about is the rights of shareholders. Specifically - and I want to be very clear on this - it's not about whether Apple returns additional cash to shareholders. It's not about how much cash to return to shareholders. It's not about the mechanism to return it. It's not about any of those things. It's about the rights of shareholders. Some time ago, early in 2012, we were looking at what things we could do to improve our governance further. As a part of that review, one of those items that came out of that was that we thought we should eliminate blank check preferred from Apple's charter. What that means is not that Apple could not issue or release preferred shares. It just says that if Apple decided to do it, we'd need to go to our common shareholders to get their approval.
So, frankly, I find it bizarre that we would find ourselves being sued for doing something that's good for shareholders. But this is the position that we're in. I think it's a silly sideshow, honestly, and my preference would be that everyone on both sides of the issue would take the money they're spending on this and donate it to a worthy cause. I think that would be a lot better use of funds. But what we're going to do - you are not going to see us do a campaign mailing. We are not doing it. You're not going to see a "Yes on 2" sign in my front yard. This is a waste of shareholder money and it's a distraction, and it's not a seminal issue for Apple. And that said, I support Prop 2. I'm personally going to vote for it. I believe it's the right thing for shareholders to have the right on this particular topic. I encourage others to vote for it. But it's not something we are going to spend cycles on, and so I think that the serious issue at hand is the return of cash, how to do it, how much to do. It's that and we are very serious about that. But this Prop 2 thing is a silly sideshow and frankly, one of the big reasons I feel like this is - we feel so strongly that, for Apple, that shareholders should approve any issuance of preferred stock. We have no preferred stock, as you know, so this isn't a matter of increasing shares. We feel so strongly that common shareholders should do it, if we decide that this is in the best interests of shareholders to issue, we would clearly go for a vote regardless of whether our charter requires it or not. So that's the way I see it.