Apple Offers ‘Proxy Access’, Making it Easier for Shareholders to Nominate Board of Directors

In a recent securities filing, Apple announced that it plans to offer „proxy access“, which allows longtime shareholders or a group of shareholders to nominate a member for its board of directors, reports the Wall Street Journal.

In a securities filing, Apple said its board of directors had adopted amended bylaws Monday that allow a shareholder, or a group of up to 20 shareholders, holding 3% of its shares continuously for three years to include board nominees in the company’s annual proxy statement.

The new bylaws allow shareholders to nominate up to 20 percent of Apple’s board of directors. Since Apple has 8 directors, shareholders would be allowed to nominate one director. Proxy access is a recent push by activist investors that seek to make changes on company boards, giving shareholders greater influence on company strategy and the ability to oust directors. Other prominent companies to adopt proxy access include McDonald’s, Goldman Sachs and Coca-Cola.

In March at Apple’s most recent annual meeting, a shareholder proposal that asked the Cupertino company to adopt proxy access garnered 39 percent support.
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Apple plans to return $200 billion to shareholders by 2017

Along with revealing last quarters monstrous profits, Tim Cook has announced that Apple is increasing its capital buyback program to the tune of $140 billion. Apple’s Board of Directors have authorized an increase of more than 50 percent to the…Read more ›

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ISS Recommends Voting ‘No’ On Icahn’s $50bn Buyback Proposal

Proxy advisory firm Institutional Shareholder Services (ISS) has recommended that shareholders vote against Carl Icahn’s share buyback proposal for Apple. According to the ISS report, “[The Apple board] has returned the bulk of its U.S.-generated cash to shareholders via aggressive…Read more ›

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Apple Profit Probably Fell For The First Time In A Decade

Apple’s quarterly profit probably fell for the first time in over a decade, thanks to new products with lower profit margins and a slowing demand for the iPhone, Bloomberg reports. Fourteen analysts have reduced their estimates for Apple in recent weeks, and on Friday, the Cupertino company’s share price fell below $400 for the first time since December 2011.

Apple will announce its second quarter results during an earnings call on Tuesday, and analysts predict that net income will have declined 18% to $9.52 billion, or $10.02 a share, over the three-month period. Revenue, however, is expected to show a small 8% rise to $42.4 billion, signaling Apple’s slowest period of growth since 2009.

“The market is in show-me mode for Apple,” said Laurence Balter, an analyst at Oracle Investment Research. “The market needs to see some evidence that the future looks bright because that candle is flickering.”

Katy Huberty, an analyst at Morgan Stanley, believes Apple may announce a dividend increase or boost share buybacks during its earnings call in an effort to placate investors. Bloomberg reports that the current quarterly dividend could rise by 17% to about $3.10 a share, based on Apple’s projected earnings and the amount of cash it has in reserve.

At the end of December, that figure stood at $137.1 billion.

Apple “probably” sold 35.4 million iPhones in the last quarter, Bloomberg reports, compared with 35.1 million a year earlier. Over the next three months that figure is expected to fall again to 25 million units. The fall in demand is being attributed to increased competition from the likes of Samsung.

“Things have changed for Apple,” said Alex Gauna, an analyst at JMP Securities in San Francisco. “The competition is more intense.”

The weakening demand is also being felt by Apple’s Asian suppliers. Earlier today, it was reported that many were trying to become less reliant on Apple as sales of the iPhone begin to fall, while Foxconn reported its biggest revenue slide in over 13 years earlier this month.

Some analysts feel Apple’s focus on secrecy isn’t helping the company, because shareholders don’t know what to expect in the months ahead. Rumors have suggested the company may launch a new low-cost iPhone, an iWatch, and maybe even a television set. But none of this has been confirmed.

“Nobody believes the secret anymore,” Balter said. “It was OK when Steve Jobs would say we have some great things in the product line, but right now that credibility has been lost.”

However, Mark Moskowitz, an analyst at JP Morgan Chase, isn’t too concerned with Apple’s share price. He believes the reason why Apple isn’t building the same anticipation for new devices that we normally see around this time of year is because it launched its latest iOS devices just last fall.

It’s also worth noting that analysts are good at underestimating Apple. The company has exceeded predictions in all three quarters since 2003, Bloomberg reports.

Source: Bloomberg

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Tim Cook: Apple Is Looking At Entering New Categories Focusing On Profit, Not Marketshare

At today’s Apple Shareholders Meeting, CEO Tim Cook admitted that Apple was “looking at new product categories” but that the company had no interest in just “pressing a button or two” to have Apple make the most products.

Asked during the Q&A section of the meeting how Apple plans to counter Android’s growth, Cook said that while it was within Apple’s power to have the most products in a category, it wouldn’t ultimately be good for the company to try to compete with Android in a race-to-the-bottom, especially given the fact that despite Android’s growth, Apple still dominates profit for the entire industry.

In addition, Apple was asked about what Apple planned in the future. Cook was coy, as usual, saying:

Obviously, we’re looking at new categories. We don’t talk about them, but we’re looking at them.

The two biggest rumors right now swirling about Apple’s next “big thing” are that the Cupertino company will enter the television market with a category-redefining iTV, and that Apple will release their own iOS-capable wristwatch deemed the iWatch. However, there are no credible reports at this moment that Apple has begun production on manufacturing either of them.

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Will Apple Split Stock At Tomorrow’s Shareholder’s Meeting?

Rumors are swirling that Apple, a company which has been having a rocky time on Wall Street lately despite reporting their most profitable quarter ever, might announce a decision to issue a stock split tomorrow at their next shareholder meeting, to be held tomorrow.

The source of the rumor appears to be a tweet from investor and analyst Douglass Kass, who says that :

High above the Alps my Gnome is hearing a rumor that Apple will announce a stock split at tomorrow’s shareholder meeting.

A stock split is when Apple decides to increase the number of shares in circulation by issuingexisting shares of outstanding stock to current shareholders. In a 2:1 stock split, for example, every share of AAPL an investor had would become two, each worth exactly half what a single share was worth previously.

Why would Apple split its stock? Traditionally, stock is split when it is becomes significantly more expensive than the stock of competing companies, but it’s unclear if that’s what is happening here. Apple stock, in fact, seems completely undervalued compared to Google, which is currently trading at $793.20 a share.

As Investopedia explains, “The bottom line is a stock split is used primarily by companies that have seen their share prices increase substantially.” But that’s not what has happened here. AAPL stock is, in fact, down almost 40% in the last six months. So what’s really going on?

Over at Seeking Alpha, one commenter speculates:

Everyone knows that stock splits add zero to the basic financials of a company. However, a reasonable stock split can have a very positive psychological impact on the value of a companies stock – especially a significantly under-valued stock like where Apple stock is at present, IMO.

In other words, if this rumor is true, it’s a measure only meant to raise market confidence in Apple… and it would appear to indicate that Apple’s higher ups are, despite assurances to the contrary, very worried about how Apple is performing on the Street.

Source: Business Insider

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Tim Cook: Controversy Over Preferred Stock Is “Silly Sideshow”

Speaking at today’s Goldman Sachs Tech Conference, Apple CEO Tim Cook was asked a series of questions about the recent controversies involving Greenlight Capital’s David Einhorn, who believes Apple wants to eliminate preferred stock and is suing the company over it.

Cook’s answers were candid, saying that the issue was widely misunderstood, and that he viewed the lawsuit as a “silly sideshow” that wasted the money of investors.

The first question Cook was asked was whether or not Apple had a “depression-era mentality,” to which he replied:

Apple doesn’t have a depression era mentality. Apple makes bold and ambitious bets on products, and we’re conservative financially, but if you look at what we done in terms of investment, last year, we invested $10 billion, and do similar this year. My definition of a depression-era mentality is not a company that invests tens of billions a year. And when you combine that with the fact that we announced last year we’re returning $140 billion, I don’t know how a company with a depression era mindset would do those things.

Now… we do have some cash. *laughs* But it’s a privilege to be in this position, where we can seriously consider returning additional cash to shareholders. The board is in very active discussions, and we will be deliberate and thoughtful. That’s what our shareholders want.

Following up, Cook was then asked about the recent controversies over preferred stock and ideas put forward by David Einhorn in regards to returning more money to investors.

Cook said that he thought such a proposal was “creative” and that “Apple welcomes all ideas from all shareholders.”

However, Cook was more blunt when speaking out about the lawsuit Einhorn was pursuing against the company over its proposal that would eliminate preferred stock, calling it a misunderstood issue.

I don’t think this is well understood. What this proposal is about is about the rights of shareholders. I want to be very clear on this: it’s not about whether Apple returns additional cash, or how much, to shareholders. It’s not about the mechanism to return it. It’s about the right of shareholders.

So some time ago, in early 2012, we were looking at what things we could do to improve our governance further, and as part of that review, one of the items that came out of that was that we thought we should eliminate a blank check preferred from Apple’s charter. What that means is that Apple can’t release preferred shares, it just means that if Apple decided to do it, we’d need common shareholders to give their approval.

So I find it bizarre that we are being sued for doing something that is good for shareholders. But this is the position we’re in.

As for the lawsuit itself, Cook characterized it as a waste of money and a “silly sideshow.”

I think it’s silly. My preference would be that everyone on both sides of the issues would take the money they are spending on this and donate it to a worthy cause. We’re not campaigning though. You won’t see a “Yes on 2″ sign on my lawn. It’s a waste of shareholder money and a distraction, and not a seminal issue for Apple.

That said, I support it, Prop 2. I personally will vote for it. I believe it is 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’re going to spend a lot of time and resources on.

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Apple To Respond To Greenlight Capital Suit This Coming Wednesday [Report]

Let’s get this over with quick, ok?

Greenlight Capital is suing Apple in an effort to get Apple to send back more of its $137 billion cash reserves in the form of shareholder dividends. Apple took this fairly seriously, and issued a press release explaining where they were at on the issue, including the fact that the Cupertino-based company has already given shareholders $10 billion of a planned $45 billion in cash.

Today, however, a judge in the US Court for the Southern District of New York approved a request by both parties in the suit to move the timetable for a response, with Apple planning to file by the end of the day this coming Wednesday, according to a report in the Wall Street Journal.

Greenlight Capital plans to reply by Friday, and both parties would like to see a hearing happen early next week. All of this comes fairly close to the planned financial shareholder meeting on February 27, which explains the haste. The law firm of O’Melveny & Meyers, representing Apple, requested the earlier timetable due to the “imminent Apple shareholder meeting that the proposed motion would affect.”

The other reason for the request for an early filing is that George Riley, a partner in the legal firm and a close friend of the late Steve Jobs, will be arguing the case for Apple. The request letter says that Mr. Riley is a fairly busy lawyer, and has hearings in Texas on Wednesday and Friday, “making a Tuesday hearing optimal, if the court can accommodate it.”

The suit itself is a plan to stop the vote on proposal two of Apple’s proxy, which includes the $5 billion payout as mentioned above. The Greenlight fund is run by David Einhorn, who wants to get Apple to issue a special type of preferred stock to return more than the planned $45 billion to shareholders. In addition, Einhorn says that the way Apple is bundling three items within the one proxy proposal violates US Security and Exchange Commission (SEC) rules.

Source: The Wall Street Journal

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Highlights from Apple’s Preliminary Proxy Statement, Shareholders Meeting Questions

Apple this week released a preliminary proxy statement in a filing to the SEC. The filing is an announcement of the 2013 annual stockholders meeting, as well as questions that will be voted on at the meeting and details of executive compensation arrangements.

Among other things, the filing details CEO Tim Cook’s total compensation for 2012. His base salary for fiscal 2012 was increased to $1.4 million in cash from $900,000, reflecting „his responsibilities for the overall leadership of the Company“. The bonus program for senior executives allows for targeted and maximum bonuses of 100% and 200% respectively, depending on performance of the company.

Additionally, following the restructuring of executive responsibilities in October 2012, Apple increased the 2013 base salary of executive officers from $800k to $875k to „recognize the additional responsibilities“ given to the officers.

Apple also gives stock awards to executives in the form of restricted stock units or RSU’s. These RSU’s are awarded to executives with a certain vesting date in the future, when they will turn into normal shares of AAPL stock. They are intended to encourage officers to remain with the company, but are designed to be more favorable than stock options for tax purposes.

In 2011, Apple awarded Tim Cook 1,000,000 RSU’s upon his promotion to CEO – half will vest in 2016, and the other half in 2021. As a result, his „total compensation“ was in the range of $378 million last year, though this is de facto inaccurate because, as Apple stated at the time, the award was intended to be viewed as spread over 10 years. This didn’t stop Bloomberg from claiming in a now-changed headline that Cook’s pay had dropped 99% from last year to this. Instead, Cook’s total compensation this year amounts to just over $4 million in cash and bonuses.

We now have more details regarding the changes made to SVP Bob Mansfield’s compensation package to encourage him to stay with the company. It was previously reported by Bloomberg Businessweek that Cook offered Mansfield „an exorbitant package of cash and stock worth around $2 million a month“ to stay with the company.

According to a lengthy disclosure in the proxy statement, Mansfield’s compensation change was largely related to how the company treats the vesting of his RSU awards after he announced he was going to retire:

The Compensation Committee believed the modification was appropriate given that Mr. Mansfield’s compensation, like that of the other executive officers, is weighted considerably toward long-term equity awards, Mr. Mansfield was expected to perform services for a significant portion of the vesting period, and Mr. Mansfield was expected to contribute to several important projects during the transition period. The Committee believed that a modification of Mr. Mansfield’s existing RSU award, rather than a grant of a new RSU award or cash bonus, was the appropriate incentive for Mr. Mansfield to continue providing services to the Company. Therefore, no other changes were made to Mr. Mansfield’s compensation.

The Committee modified the vesting schedule of Mr. Mansfield’s November 2011 RSU award so that the RSUs that would have vested on June 21, 2013 instead vest daily over the period from March 24, 2012 to June 21, 2013, subject to Mr. Mansfield’s continued employment by the Company. The March 24, 2012 date was chosen because it was the most recent vesting date of an RSU award held by Mr. Mansfield.

With regards to the shareholders meeting, there will also be votes on six proposals related to compensation, director reelection and more. The proposals are detailed in the proxy statement, but there is nothing out of the ordinary in them.

The 2013 Annual Meeting of Shareholders will occur at Apple’s 1 Infinite Loop headquarters on February 27, 2013 at 9AM.

(Tim Cook image via AllThingsD/Asa Mathat)

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