Today, Apple responded to Greenlight Capital’s motion for preliminary injunction blocking a shareholder vote on a plan which Greenlight claimed would eliminate Apple’s ability to issue preferred stock.   Greenlight had argued that the plan was “bundled” with other proposed amendments to Apple’s articles of incorporation (as “Proposal No. 2”)  for a single up or down vote, and that “bundling” violates SEC “unbundling” rules. (For the details of Greenlight’s motion, see our previous post.)

In opposition, Apple takes issue with Greenlight’s characterization of Proposal No 2.  According to Apple, the proposal does not eliminate Apple’s ability to issue preferred shares, but merely mandates that Apple seek shareholder approval for any such  issuance – something Apple would do in any case as a matter of good corporate governance.  Moreover,  they argue, Proposal No. 2 is not a prohibited “bundle”  that combines “discrete material proposals…in a manner that puts shareholders to an unfair choice.”  Instead, it is a single “undeniably pro-shareholder” proposal to amend and restate the Apple articles of incorporation in the manner set forth in a red-line attached to the proxy materials. According to Apple, Greenlight is seeking to block the shareholder vote in an effort to “induce Apple to issue a novel form of perpetual preferred stock that [Greenlight] believes would benefit them substantially.”

Why, then, are plaintiffs intent on depriving Apple’s shareholders of the opportunity tovote on the proposed amendment? The reason is this—plaintiffs have recently been attempting to persuade Apple to issue a novel type of perpetual preferred stock. Plaintiffs contend that giving common shareholders the right to vote on the issuance of their preferred stock would inhibit that plan. Plaintiffs’ principal, David Einhorn, referred to the necessity for shareholder  approval as a “roadblock” to his proposal and noted that it would just “make it harder.”  He said that he wanted to “take the risk away” of a shareholder vote.

Tim Cook, Apple CEO (who was a guest of the First Lady at last night’s SOTU address) also spoke out about the Greenlight lawsuit yesterday at the Goldman Sachs Technology and Internet Conference, calling it a “silly sideshow.”  A partial transcript of his comments was added by Apple to the proxy materials  filed with the SEC. Judge Sullivan granted Apple’s request to further expedite the briefing. so Greenlight’s reply papers are due February 15 and the hearing will be held on February 19.