Now that Apple has announced that it will devalue it our idea, A pple’s stated reason for the proposal is no longer true. There’s been a lot said about the corporate governance and shareholder rights aspect of proposal two. Because Apple bundled multiple proposals together into a single vote, let me address each one separately. The first has to do with the majority voting of directors. We actually agree with this provision and we understand that several corporate governance groups have recommended supporting proposal to for this reason. Even though we support this idea, we don’t think it will be harmful to vote against proposal two, because the directors have already agreed to be bound by majority voting. If proposal to fails, Apple can reintroduce it at the next shareholder meeting where we would expect it to be approved.
In the meantime, Apple will honor majority voting. The second aspect has to do with eliminating preferred stock and blank check for its stock. While a limited and blank check preferred stock may please shareholders, they are highly focused on corporate governance. As a practical matter, there is no one in a position to take over Apple over the objection of the Board of Directors. The company is simply too large. There has been some discussion about whether shareholder should have a say on our idea on in the event that Apple wishes to go forward here Apple has said that if it decides to pursue our idea, it will put it to a shareholder vote no matter which way proposal to is resolved.
Of course, Apple can do this and we have no objection. So, the bottom line is that regardless of how this vote comes out, if Apple decides to go forward with iPrefs, shareholders will have a say. As a result, there is no practical downside to voting against proposal two. So, as a practical matter, we see the voter proposal to as a referendum on our idea. If you vote against proposal two, you will tell Apple and it’s board that you agree with us and that Apple needs to improve it’s capital management.
We recognize that some institutions that want to vote, based on corporate governance will support proposal to. We ask that if you agree with us and are more interested in unlocking the value then in tech E corporate governance points that you vote against proposal two so that your voice can be heard. Now we will open the call to questions. I want to thank everyone for taking the time from your busy day to hear what I had to say today. Given the time I’ve already spent, I think we still have time for about 15 minutes of Q&A. Operator, would you please of open up the line for the first question.
Unknown Speaker*
(Operator Instructions).
Oakham bade.
Unknown Speaker*
I appreciate your thoughts on cost of capital equity and preferred debt. (inaudible) using you as a target for a particular plan that I think is important from the perspective of how to attack apples (i naudible).
Unknown Speaker*
Tremendous feedback. Can anything be done about that?
Unknown Speaker*
I apologize. ( inaudible) as a surrogate for delivering the message.
Unknown Speaker*
There’s tremendous opportunity in ( inaudible). It certainly would, for example, my colleagues and myself ( inaudible).
Unknown Speaker*
I guess that wasn’t going to work out. Can Could we take the next question?
Unknown Speaker*
Michael a trick up.
Unknown Speaker*
David, this is Oakham they capital again. Just continuing with the theme of the homeowner nation. The way to protect –
Unknown Speaker*
What nation? I didn’t understand the question what?
Unknown Speaker*
Home innovation, can you hear me?
Unknown Speaker*
Home automation? Okay.
Unknown Speaker*
Specifically, this is an area that’s unexploited. Now, Wi-Fi is the power of Wi-Fi is such that home automation technology is a very simple data delivery technique and home automation would not work on Wi-Fi. The key strategy that Apple needs to develop in order to protect its ecosystem is home automation. Specifically, the way bores the big technology. There is a company –
Unknown Speaker*
Sir, this is not the right for him for this line of question. Unfortunately, we really want to talk about the idea we have on the table today and the shareholder concerns relating to the vote work I hate to be rude. We only have a short amount of t ime. Could we go to the next caller please.
Unknown Speaker*
Richard Clayton.
Unknown Speaker*
David, this is rich Clayton. Inks for a much for the call. I find it very interesting. I have to say I take issue with the assertion you made at the end that voting against resolution number two. There would be no negative consequences for shareholders. As you may know, we are strong supporters and have been for NIM many years of majority voting at American companies and strongly support Apple’s decision to entrench that. The changes to the corporate charter. But moreover, even if we were persuaded that the proposal for I preferred shares that you put forward were at our best interest with long-term shareholders, we still very much value being able to have about on that and we’ve value changes to the corporate charter that would prevent the board are making what would seem to us a pretty momentous decision without shareholder approval.
At the end of the call you said that Apple had told her that if they did decide to move forward, that he would have a shareholder vote. So, frankly, it’s not at all clear to us why we are opposing proposal number two, since your past statements as I have understood them are that by eliminating the board’s ability to issue preferred shares without a shareholder vote, it would impede. IPreferred proposal. From what you said today, it doesn’t sound like it would at all. I’d like you to clarify that, if you could.
Unknown Speaker*
Sure. But busy back end of this practice can be looked at in both directions and I understand your Perspex of on this. It is unfortunate that Apple combined several things into a single thing, a single vote, which is unfortunately the basis why we wanted to go to the court to save you could get this unbundled so we wouldn’t have to confuse the issue of majority voting with the preferred issue. Relating to what we are saying, I don’t believe in the grand scheme of things there’s an important difference either way. In the sense that, Apple is going to abide by majority voting either way. If they don’t do it this year, formalized it in the charter, because of the bundling issue, they can put it up next year and I suspect everybody will vote for it. The same is really true relating to the preferred. Either way, and Apple said this in their court papers and in the public statements, that they would want to conduct a vote on this. Now, of course that there prerogative.
Frankly, we think it would be great if they wanted to survey there shareholder pent opinions about a lot of things relating to the capital structure. Setting all that aside, think we wind up in the same place from a practical matter. It is not going to be a blank check preferred issue in the next year and is not going to be a director who doesn’t receive the majority of the votes continuing in office. So, what we we are as king people to do, is to take this vote, which four people are very, very focused on corporate governance, I can understand why you care about this is and I respect that. For everybody else was more concerned about unlocking shareholder value, I think this
