Cook explained that the chagnge was being made to enhance Apple's corporate governance.
So frankly I find it bizarre that we would find ourselves being sued for something that’s good for consumers. I think it’s a ... it’s a silly sideshow, honestly.He added that the company wasn't going to do a mailing campaign to shareholders about the charter change. He also said that both sides in the issue should take the money they are spending on the fight and donate it to charity, instead.
Greenlight's lawsuit is a waste of money, Cook added, because even if Apple were to leave the charter unchanged, the company would insist on a vote from common shareholders before issuing any preferred stock.
Preferred stock is stock that entitles the holder to a fixed dividend, and whose dividend payment takes priority over that of common-stock dividends. Naturally, preferred stock is priced differently from common stock.
Greenlight's suit is really over the huge $137 million cache of money that Apple has. The lawsuit argues that instead of a special dividend or stock buyback, Apple should should distribute a "perpetual preferred" stock that could pay a dividend yield of 4 percent. Apple's current common stock carries about a 2.3 percent dividend yield.
The advantage, Einhorn argues, is that the preferred stock dividends would be spread out over time in relatively small amounts, rather than a large sum spent all at once in the form of a special dividend or stock buyback program. For those unaware, preferred stock is stock that entitles the holder to a fixed dividend, and whose dividend payment takes priority over that of common-stock dividends. Naturally, preferred stock is priced differently from common stock.
Greenlight sees the aforementioned change as making it more difficult to issue preferred stock. Either way, the legal battle appears to be moving along quickly. On Monday, Juddge Richard Sullivan of the U.S. Court for the Southern District of New York approved both parties’ request to speed up the legal process for the dispute.
Apple said it will file its response to the lawsuit by the end of the day on Wednesday, Feb. 13, and Greenlight will respond in kind by Friday. Both parties want a hearing early next week.
There is a necessary urgency to the process. Apple’s shareholder meeting is scheduled for Feb. 27.