Hot topic at Apple shareholders meeting is off limits

Apple opens up its doors to shareholders tomorrow, an annual event that's been home to everything from group renditions of "happy birthday" to environmental protesters donning giant iPod costumes.

It's also home to formalities like re-electing board members, choosing Apple's accounting firm, as well as a chance for executives to dodge the inevitable shareholder questions about products the company is working on.

This year is a little different though. Shareholders were set to vote on something that's no longer on the table following a lawsuit filed against Apple earlier this month.

Greenlight Capital, a hedge fund run by David Einhorn, successfully sued Apple over its plans to change its articles of incorporation dealing with preferred stock. Einhorn argued that Apple bundled the issue in with other items. A federal judge last week sided with Einhorn, meaning Apple's policy will not go to a vote.

Ahead of the decision, Apple CEO Tim Cook made his disdain for the issue very clear -- that did not include Einhorn's proposal, whichthe company said it would "thoroughly evaluate," but the lawsuit that came with it. In an interview earlier this month, Cook referred to it as a "silly sideshow" and a waste of resources for both companies.

Even so, what the company's doing with its money has long been an issue for shareholders, who in recent years were treated to a meteoric rise in the price of Apple's stock. Cook and company would deflect questions about what they intended to do with the growing pile of cash by pointing to the stock as a place for investors to find returns.

That strategy worked last year, but may not go over as well this time around. The company's stock has slid more than 35 percent since reaching an all-time high five months ago. The one thing that's different is that Apple's now paying out a dividend, and shoring up its value with a multiyear stock buyback plan. Einhorn's plan, which was unveiled late last week, calls on the company to go one step further with a preferred stock plan called "iPrefs" that would give investors separate shares for each share of common stock that would deliver a fixed, annual return.

What's on the table
So what are shareholders voting on? Two shareholder proposals, both of which Apple's board has urged shareholders to vote against.

The first suggests a new requirement for Apple's top executives to hold onto at least 33 percent of their shares until they reach the age of retirement, a requirement the proposal's creator says would "focus our executives on our company's long-term success."

The other shareholder initiative calls for Apple to create a board committee on human rights that would evaluate the company's supply chain and its overall operations.

"In recent years the Company has become embroiled in public controversies regarding the human rights implications of its products and supply chains," the proposal says. "The proposed by-law would establish the vehicle of a Board Committee, but would leave the process of appointment and implementation of the Committee to the full Board of Directors."

In its proxy statement, Apple argued that it already has a Supplier Code of Conduct that's policed by an internal auditing team, and that the creation of such a venture would "distract" Apple's board.

Preliminary votes on both issues are expected to be announced at the meeting, with a final tally to be included in a full filing with the U.S. Securities and Exchange Commission.

Why the meeting is still interesting
Even though Apple's annual meeting is typically a dull affair for those expecting product news and announcements, it's really the only time of the year when the public (albeit the Apple stock-holding public), has a chance to pepper some of the company's top executives with questions.

In recent years, that's included questions about the company's strategy in the living room (from set-top box hardware to content deals), its involvement in trade shows, as well as its partnership with other companies including Twitter and Facebook. Oftentimes the answers skirt around a definitive answer, but an open mic and an executive on the hot seat make for a good combination, even if it's on Apple's turf.

Sure to spice things up is that the meeting comes at a time when Apple shares have dropped from all-time highs last September. At last year's meeting, shareholders were almost euphoric about the company's performance, though inquired about the possibility of a stock split and what Apple planned to do with all its cash. That's something investors will certainly remain interested in, even if they can't vote on it.