On Dec. 27 Apple’s Board issued a preliminary proxy statement with the Securities & Exchange Commission (SEC) regarding its upcoming shareholder meeting in February. Among the proposals that are to be addressed in this shareholder meeting is Guru, Carl Icahn’s, buyback proposal. The guru, known for his activist investing, is not afraid of getting his hands a little dirty as we saw earlier this year with the Dell (DELL) debacle.
But in regards to Apple (NASDAQ:AAPL), Carl Icahn requested that the company buy back no less than $50 billion of its shares during the fiscal year ending in September. It is this proposal that Apple’s board is trying to deter its other shareholders from voting for.
- Warning! GuruFocus has detected 7 Warning Signs with AAPL. Click here to check it out.
- AAPL 15-Year Financial Data
- The intrinsic value of AAPL
- Peter Lynch Chart of AAPL
Icahn has been tampering with Apple and pressuring the company to increase its present buyback plan by borrowing against foreign cash holdings, and in turn, settling on the amount of $50 billion in immediate share repurchases.
The following is Apple’s disapproval of Icahn’s proposal and the Board’s advice against it:
This vote will be finalized and decided upon at Apple’s February 28 annual shareholder meeting at its headquarters in Cupertino, California.
Along with the Board’s distaste for Icahn’s plan, the company also discussed some payment changes for the Apple CEO Tim Cook. The CEO will continue to receive $1.4 million per year in his cash-based salary, which is the same as when he started in 2011. It was also noted that the CEO must own shares of the company’s stock worth at least ten times what his base salary is within a five year period. As of Dec. 26, Cook owns at least 35 times his base salary, or approximately $49 million in AAPL shares.
With the stock seriously trailing the S&P 500 this year, Cook was able to forfeit some of his restricted stock units (RSUs) based on the performance of the stock. Along with forfeiting about 100,000 of the restricted shares, the CEO also asked that more of his RSUs be considered as “at risk” based on the stock performance:
With this request, time is all that matters for 40,000 RSUs of Cook’s that will be based on how the stock does by next August. As of now, Apple is slightly above the S&P 500 since the close of August, with its rise being slightly over 11%.
Apple’s historical revenue and earnings growth:
Apple has a market cap of $504.45 billion. Its shares are currently trading at around $560.66 with a P/E ratio of 14.20, a P/S ratio of 3.00 and a P/B ratio of 4.10. The company had an annual average earnings growth of 60% over the past ten years.
GuruFocus rated Apple the business predictability rank of 4.5-star.