NEW YORK -- David Einhorn tried to dissuade Apple (AAPL) last week from eliminating its ability to issue preferred shares at will, saying the need to first obtain shareholder approval would be an unnecessary roadblock to any such future plans, the iPhone maker said in a court filing on Wednesday.
Apple Chief Financial Officer Peter Oppenheimer described in the filing how, during a discussion with Einhorn and Apple CEO Tim Cook on Feb. 6, Einhorn opposed the so-called "Proposal No. 2", which would remove an existing system for issuing preferred shares at the company's sole discretion, without having to get shareholders' approval.
Einhorn "viewed requiring shareholder approval for his ... proposal as a 'roadblock that was not needed'," Oppenheimer declared in the filing. "He said that he wanted to 'take the risk away' of a shareholder vote and asked 'why make it harder?'
"We told Mr. Einhorn that Apple was considering his proposal, but that the Board would not issue his proposed perpetual preferred shares without shareholder approval," Oppenheimer added in his legal declaration.
Einhorn did not immediately respond to requests for comment.
Einhorn's Greenlight Capital sued Apple last week in U.S. District Court in Manhattan, hoping to block a Feb. 27 shareholders' vote on Proposal
Instead, Einhorn wants Apple to issue perpetual preferred stock with a 4 percent dividend to existing shareholders, part of his broader pitch for the company to send more of its $137 billion cash hoard investors' way.
Apple has said it will carefully consider that "creative" idea.
In Wednesday's motion, Apple also challenged Einhorn's assertion that it had "bundled" three different proxy proposals into one, in violation of U.S. Securities and Exchange Commission rules.
Proposal No. 2 also seeks to amend Apple's articles of incorporation by providing for majority voting for directors, and establishing a par value for Apple stock.
"Bundling occurs when discrete, material proposals are combined in a manner that puts shareholders to an unfair choice," Apple said. "That is not the case here."
Apple said in Wednesday's motion it had initiated the proposal in response to a report by influential proxy adviser Institutional Shareholder Services. The firm said this week that so-called "blank check" preferred stock -- issued without shareholder approval -- could be abused as a takeover defense.
"This report reflected a view widely held by shareholder advocates that corporate boards should not have 'blank check' authority to issue preferred shares," Apple said.
A hearing in the case is scheduled for Feb. 19.
The case is Greenlight Capital LP, et al., v. Apple Inc., U.S. District Court, Southern District of New York, 13-900.