CUPERTINO -- There are shareholder meetings. And then there are Apple (AAPL) shareholder meetings.

Its share price is still way off record highs. It had an embarrassing dust-up with a large hedge-fund investor. And there are rumors of a stock split.

So its annual gathering of investors Wednesday in Cupertino could be more interesting for what's NOT on the agenda.

After hedge fund operator David Einhorn successfully sued Apple over its plans to change its articles of incorporation dealing with preferred stock, a federal judge ruled last week that Apple needed to quickly amend its proxy statement, which means the stock issue will not go to a vote.

Observers expect CEO Tim Cook, who famously dismissed Einhorn's complaint as a "silly sideshow,'' will have to address the elephant in the room on Wednesday. It was unclear whether Einhorn, a major investor in Apple, will show up. But if he does, the fireworks could be impressive.

Einhorn "has one idea; Apple has another,'' said Charles Elson, director of a corporate governance center at the University of Delaware. "At the meeting, you'll hear both these approaches discussed. But either way, the judge's order is embarrassing to Apple. I don't know why Apple lumped together popular items for a vote with this controversial one. It just doesn't make sense.''


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While the details get complicated, Apple essentially packaged together a number of proposals in its proxy statement to amend its articles of incorporation, and one of those was the company-sponsored proposal that Einhorn is fighting, which would require shareholder approval to create a special class of stock.

"The items,'' said Elson, "should have been separated.''

Apple did not comment immediately on the issue and it's unclear how Cook might deal with what has now become a very public spat when he appears before shareholders.

Before the judge ruled, Cook did make clear his distaste for the matter. Even though he said Apple would "thoroughly evaluate'' the issue, he called the whole thing a waste of resources for both Apple and Greenlight Capital, the hedge fund that Einhorn founded.

Einhorn has called on the Cupertino company to create a class of preferred stock with a 4 percent annual cash dividend paid quarterly as a way to return money to shareholders from Apple's growing cash reserves. As of the end of the December quarter, the company reported $137.1 billion in cash, roughly two-thirds of which is held overseas.

"I think this is a big deal,'' said analyst Roger Kay with Endpoint Technologies Associates. Einhorn, he said, has "taken it upon himself to defend the general interest of shareholders by trying to get Apple to distribute more of its cash.''

While Apple stock has fallen sharply from the more than $700 per share it commanded last fall, shares did get a slight bump on Tuesday as rumors spread of a possible stock split. Bad PR is that last thing Apple needs right now, and Kay says that if Einhorn does show up Wednesday at Apple's headquarters, things could get messy.

"He's a proxy for other investors saying to Apple: 'Do something with all that cash you have,''' said Kay. "So there's this tension going into the meeting between Apple and the investors Einhorn represents. Tim Cook can't avoid talking about it. This is a huge subject, and it's right there on the table for everyone to see.''

Contact Patrick May at 408-920-5689 or follow him at Twitter.com/patmaymerc