Billionaire and activist investor, Carl Icahn who has 1% stake in Apple, has decided to withdraw his proposal calling for an additional $50 billion stock buyback program, which was above and beyond the $100 billion share repurchase program that Apple announced last year.Apple had announced a program that would give $100 billion back to investors via a $60 billion share buyback program and $40 billion in dividends. But Carl cited Apple’s ability to borrow money cheaply right now as a compelling factor to initiate the aggressive buyback program.
Stockholders were supposed to vote on his proposal on February 28th. However, last night influential proxy-advisory firm Institutional Shareholder Services (ISS) and smaller firm Egan-Jone had advised shareholders to reject the proposal by the activist investor.
ISS said the proposal would “micromanage the company’s capital allocation process.” While the shareholder advisory firm did critique Apple’s failure to fully articulate its long-term capital needs to shareholders, it said the “good-faith efforts” the board has already taken and its historical stewardship warrant support.
In a letter to shareholders, Carl Icahn explained that the reason for the withdrawal was because of Apple’s decision to repurchase $14 billion of its own shares.
We also agree with ISS’s observation, taking into account that the company recently repurchased in “two weeks alone” $14 billion worth in shares, that “for fiscal 2014, it appears on track to repurchase at least $32 billion in shares.” Our proposal, as ISS points out, “thus effectively only asks the board to spend another $18 billion on repurchases in the current year.”
He also mentioned that he was excited about Apple’s future, and was optimistic that the company would launch products in new categories.