Greenlight Capital, an Apple shareholder, has sued Apple in a New York federal court over the company's proposal to eliminate preferred stock.

Greenlight is a shareholder since 2010 with 1.3 million Apple shares worth nearly $600 million.

Apple said in its proxy statement filed with the Securities and Exchange Commission that its board does not plan to issue preferred stock in the future and believes it is "appropriate" to eliminate the possibility from its charter.

Greenlight is dissatisfied with Apple's capital allocation strategy. The company believes Apple's proposal to eliminate preferred stock would close down one avenue for Apple to reward shareholders with more cash.

David Einhorn, who heads Greenlight Capital, said the proposal would close down one avenue for Apple to reward shareholders with more cash.

"Apple has $145 per share of cash on its balance sheet. As a shareholder, this is your money," Einhorn said in a letter to Apple's shareholders.

Responding to Greenlight Capital's proposal, Apple said it would thoroughly evaluate Greenlight Capital's current proposal to issue some form of preferred stock.

"We welcome Greenlight's views and the views of all of our shareholders," Apple said.

Apple added that its proposal includes some changes but they would not prevent the issuance of preferred stock.

"We remain committed to having an ongoing dialogue with our shareholders to get perspectives around return of capital and driving shareholder value," Apple added.

Most corporations don't hoard cash the way Apple does. They keep enough on hand for immediate needs, and either invest the rest in their operations or hand it out to shareholders in the form of dividends or stock buybacks.

By early last year, Apple said its cash balance had built to a point beyond what the company needed to run its business, so the cmompany announced a plan to return $45 billion to shareholders over three years. As of next week Apple will have executed $10 billion of that plan.