“Progressive has an intelligent, rational, and transparent way to deal with the surplus cash that its operations generate. Apple doesn’t. It has fumbled around, trying half-heartedly to make Wall Street and good governance types happy, but in the process managing to ensnare itself in a nasty debate about whether it’s shortchanging its shareholders by hoarding cash,” Sloan writes. “As a result, what should have been a normal, boring Apple shareholder meeting next week has become a confrontation between Apple and some sharp-elbowed Wall Street types who want Apple to goose its stock price by giving $50 billion (or more) worth of new preferred stock to its common shareholders.”
Sloan writes, “Apple is likely to ultimately prevail in a shareholder vote to eliminate its board’s right to issue preferred stock. But its Street image has taken a whack, because it has come out looking clueless about how to handle its cash. Progressive has no such problems. It pays its shareholders (who include me) an ultra-rational dividend: a variable, once-a-year payment based on the success of its business.”
Read more in the full article here.