Carl Icahn, the richest investor on Wall Street who has been pressing Apple to make a $150 billion stock buyback, has announced the next phase of his master plan. He has submitted a proposal to Apple shareholders that asks them to vote on his buyback, which effectively puts more pressure on Apple to meet his demands.
The question is whether a more aggressive buyback is actually in Apple’s best interest.
In a cover story for TIME, Icahn reveals that he has submitted a precatory proposal for Apple’s next annual shareholders meeting. The nature of the proposal means that even if the majority of shareholders voted for it, Apple’s management would not be forced to comply. But it would pit investors against Apple and possibly create a proxy fight between large stockholders, notes TIME.
Icahn owns nearly 4 million shares in Apple, and he wants the company to take back billions of its own stock and put that money back in the hands of shareholders. The reason for this desire is obvious: since Icahn is a large shareholder himself, Apple agreeing to his buyback proposal would drive up the value of AAPL, and in turn, make Icahn’s holdings worth more.
Apple’s response to Icahn’s new proposal:
“Earlier this year we more than doubled our capital return program to $100 billion, including the largest share repurchase authorization in history. As part of our regular review process, we are once again actively seeking our shareholders’ input on our program, and as we said in October, the management team and our board are engaged in an ongoing discussion about it which is thoughtful and deliberate. We will announce any changes to our current program in the first part of calendar 2014.”
Tim Cook has been meeting with Icahn personally over the past few months, and the two share a common opinion that Apple’s stock is severely undervalued.
“We’ve discussed a lot of things, and he asked a lot of questions, and really listened.” Icahn says his most recent conversation with Cook was a 20-minute phone call Nov. 21—which Cook’s assistant initially tried to schedule at 5 a.m. Pacific Time. “That’s usually when I go to bed! This guy’s tougher to get than the President.”