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Friday, February 22, 2013, 04:35 pm PT (07:35 pm ET)

Apple pulls 'Prop 2' from upcoming proxy vote, says disappointed with court decision

After a U.S. federal judge sided with David Einhorn's Greenlight Capital in a lawsuit seeking the injunction of proposal vote scheduled to be held at Apple's upcoming shareholders meeting, the Cupertino, Calif., company removed the contentious "Prop 2" item from the docket.

iPrefs


Apple announced in a statement on Friday that it will be pulling Prop 2 from its annual meeting slated to take place on Feb. 27, reports AllThingsD. Einhorn sought to block a vote on the proposal as it contained an article which revokes the ability of Apple's board members to issue preferred stock, instead putting that power into the hands of shareholders.

Apple's statement:
We are disappointed with the court’s ruling. Proposal #2 is part of our efforts to further enhance corporate governance and serve our shareholders’ best interests. Unfortunately, due to today’s decision, shareholders will not be able to vote on Proposal #2 at our annual meeting next week.

With the announcement, Apple is conforming to Judge Richard Sullivan's decision issued earlier today.

Einhorn wants Apple to issue so-called "iPrefs," or perpetual preferred stock that would pay out a quarterly 50 cents dividend equating to $2 per year. He suggests Apple could extend and enhance the program over time to ultimately offer five iPrefs per share of common stock, doubling the current dividend rate to return some $47 billion of company's swelling $137 billion cash hoard.

While Prop 2 has been removed from next week's annual meeting, Apple is not obligated to issue the iPrefs. It is unclear what the company plans to do regarding Einhorn's pressure, but thus far it has been loath to give in to the hedge fund manager's demands.