Apple gained a notable new ally on Sunday in its attempts to beat back a proposal by Carl C. Icahn calling for a $50 billion stock buyback.
Institutional Shareholder Services, the prominent proxy advisory firm, told clients in a note on Sunday that they should vote against Mr. Icahnâs plan, calling it unnecessary given efforts by the company to give out a portion of its $159 billion cash pile.
âThe boardâs latitude should not be constricted by a shareholder resolution that would micromanage the companyâs capital allocation process,â I.S.S. wrote in its note.
Since last summer, Mr. Icahn has been calling upon Apple to pay out a significant portion of its enormous war chest to shareholders. He isnât the first to do so: A fellow activist investor, David Einhorn, battled the company last year to force a similar return to shareholders.
Apple has outlined a plan to return $100 billion to shareholders through stock buybacks and dividend payments.
I.S.S. noted that the iPhone maker has not been wasteful in spending money on unnecessary acquisitions.
The proxy advisory firm also noted that the vast majority of Appleâs cash is held overseas. Bringing it back would entail either incurring a big tax bill, or borrowing debt that could lower the companyâs credit rating.
But I.S.S. did criticize the company for not providing a long-term vision of how it would deal with the cash that rapidly accumulates in its coffers.
âGiven the rate at which the percentage of offshore cash is growing, moreover, a strategy which goes no further than returning the excess domestic cash will soon become inadequate,â the advisory firm wrote.
But it ultimately praised Apple for making âgood-faith effortsâ to adopt more shareholder-friendly policies.