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Apple files Preliminary Proxy Statement with SEC, urges shareholders to oppose Carl Icahn's share buyback proposal

Apple on Friday posted its Preliminary Proxy Statement with the SEC. The statement provides notice that Apple's annual shareholders meeting is scheduled to take place in 2014 on Friday, February 28.

The meeting will see shareholders consider five proposals, one of which is activist investor Carl Icahn's proposal that Apple increase its stock buyback program by a minimum of US$50 billion. Apple, though, is of the position that shareholders should vote against Ichan's proposal.

Apple, in its proxy statement, makes a point of noting that, while it opposes this specific proposal, it remains intent on returning profits to shareholders and is open to shareholder input in this regard. But rather than jumping on board with Icahn's proposal, Apple writes that it prefers to take a more measured approach that sees cash returned to shareholders "on an efficient and sustained basis." That said, Apple notes that it will continue to evaluate the state of its capital return program and will adjust it as need be in order to maximize the long-term interests of its shareholders.

Apple further adds that because it operates in an extremely competitive and fast-moving industry, it's imperative that it maintains enough cash on hand to be able to take advantage of opportunities as they arise.

The proxy statement reads in part:

With breakthrough products and services such as the Mac, iPod, iPhone, iPad and App Store, the Company has created huge market opportunities, and the Board and management team believe the opportunities that lie ahead are just as exciting. Given such large and global markets, the Company competes with large companies around the world, many with their own significant technical capabilities and significant capital. This dynamic competitive landscape and the Company's rapid pace of innovation require unprecedented investment, flexibility and access to resources.

Successfully innovating and executing against these large opportunities also requires careful stewardship by the Board and management team, and the Company's evaluation of capital return is conducted in the context of supporting the Company's continued business success and desire to deliver attractive returns to long-term shareholders

If history is any indication, investors should be confident that Apple won't be shy about increasing its capital return program. If you recall, Apple first announced a quarterly dividend and share repurchase program of $45 billion in March of 2012 and subsequently more than doubled the program to $100 billion just one year later. That said, the proxy statement indicates that any changes to the program will be announced by March or April of 2014.

As a point of interest, Apple notes that it has, to date, spent $23 billion on share buybacks and $43 billion in quarterly dividend payouts.

Another shareholder proposal on the docket is whether or not Apple should create a new committee to keep tabs on human rights issues in Apple's supply chain. On this topic, Apple also urges shareholders to vote no.

Apple relays that it's already doing a whole lot in this regard and that creating a new committee would be duplicative. Specifically, Apple emphasizes that it is "committed to the highest standards of social responsibility and human rights wherever we do business."

The proxy statement reads in part:

In addition to monitoring and driving improvements for workers in the supply chain, the Company places strong emphasis on education and worker empowerment initiatives. The Company has established a training program for new employees at the Company's suppliers to inform them of their individual rights, local laws and the Company's Supplier Code of Conduct. Millions of workers have participated in this training program.

The Company also partners with educational institutions to offer free college-level courses to workers who make the Company's products. Hundreds of thousands of workers have attended these classes since 2008, and many have gone on to earn associate's degrees. The Company recently expanded this educational program to offer more opportunities for participants to work toward a bachelor's degree.

...

In December 2013 the Company was awarded its 12th consecutive perfect rating from the Human Rights Campaign's annual Corporate Equality Index, which scores businesses based on lesbian, gay, bisexual and transgender workplace policies, and won the title of "Best Places to Work for LGBT Equality."

The Board does not believe that establishing a committee is an effective way for the Company's practices and goals to continually evolve and improve in response to changing conditions. Instead, such an additional and redundant committee would distract the Board from its other responsibilities to the Company and its shareholders, while adding little value to the Company's existing commitment to human rights and social responsibility. The Company's existing governance framework has produced a strong commitment to human rights and progress that is evident in the Company's practices and policies.

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