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 In a letter to Apple shareholders on Monday, Icahn wrote he was
ditching his non-binding proposal to force Apple to add another $50
billion to its stock buyback plan, "especially when the company is
already so close to fulfilling our requested repurchase target."
Apple shares closed up 1.8 percent higher at $528.99 on Monday.
For months Icahn had been asking Apple to boost its stock buyback
program, proposing the iPhone maker repurchase another $50 billion.
On Sunday, Institutional Shareholder Services Inc recommended
shareholders vote against Icahn's nonbinding proposal, saying the
motion would "micromanage" how the company uses capital.
Proxy advisory firm Egan-Jones has also recommended voting against
Icahn's plan, which was up for a vote at Apple's February 28
shareholders meeting.
Apple Chief Executive Officer Tim Cook told The Wall Street Journal
last week he wanted to be "aggressive" and "opportunistic" in buying
back shares. He pointed out the company had repurchased $14 billion
in stock in the two weeks since reporting financial results that
disappointed Wall Street.
With the latest purchases, Cook recently said Apple had bought back
more than $40 billion of its shares over the past 12 months. He said
it was a record for any company over a similar span.
Icahn wrote in his open letter that Apple's recent share buybacks,
amongst the largest in history, have been a bit like "bailing with a
leaky bucket," given the scale of its cash reserves — though they
were enough to placate him.
"As Tim Cook describes them, these recent actions taken by the
company to repurchase shares have been both 'opportunistic' and
'aggressive' and we are supportive," Icahn wrote.
Apple had almost $160 billion in cash at the end of 2013.
"It looks like Icahn's crusade paid off. Apple's board and Icahn are
meeting halfway," said Antony Filippo, a Toronto-based independent
investment manager who does not own the stock.
"Icahn wanted to spawn change and he got a little bit of that. Apple
buying $14 billion around the $500 mark is huge. They would have
never done that without an activist breathing down their neck."
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In late January, Icahn tweeted he had bought another half-billion
dollars of Apple stock, boosting the value of stake in the company
to more than $4 billion. At the time, Icahn told Reuters the decline
in Apple shares presented "a great opportunity" to add to his
position.
Icahn has provided a blow-by-blow account on Twitter of every new
investment he has made in Apple this year as well as pleas to Apple
on an aggressive buyback.
Not everyone is amused. Anne Simpson, senior portfolio manager of
investments and director of corporate governance for the California
Public Employees' Retirement System, which owns close to $1.6
billion in Apple shares, recently told CNBC that Icahn was engaged
in "megaphone diplomacy." (http://www.cnbc.com/id/101377530)
In a statement to Reuters on Monday, Simpson said: "We welcome
Icahn's move to drop his proposal. Any distribution of cash should
be undertaken by a company's board after thoughtful and strategic
planning, and be in the best interest of the company and all
shareholders. Apple has indicated that it has a plan and has already
begun distributing capital to shareholders. We believe this is a
more prudent approach. We need to tend the goose that lays the
golden egg."
(Reporting by Jennifer Ablan in New York
and Chandni Doulatramani in Bangalore; editing by Lisa Von Ahn,
Jeffrey Benkoe and Bernard Orr)
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