Carl Icahn wants is Apple to initiate a $150 billion buyback program of its stock. Icahn tells TIME he filed a shareholder proposal with Apple on Nov. 26, three days before the deadline for measures to be voted on at the company’s next annual shareholders meeting.

Carl Icahn wants is Apple to initiate a $150 billion buyback program of its stock. Icahn tells TIME he filed a shareholder proposal with Apple on Nov. 26, three days before the deadline for measures to be voted on at the company’s next annual shareholders meeting. Carl Icahn knows what he wants, and he usually gets it. These days, what Carl Icahn wants is Apple to initiate a $150 billion buyback program of its stock. Although Tim Cook hasn’t clearly expressed it, he’s been reluctant to follow Icahn’s request, which led him to file a precatory proposal.

A "precatory proposal" is a fancy term which, in clear English means a shareholder proposal for a stock buyback program to be voted on at Apple’s next annual shareholder meeting. Of the 950 million of Apple shares of stock that are issued and outstanding, Carl Icon reportedly owns over 4.7 million shares, which represents over $2.5 Billion investment, not the largest investor, however, someone that Apple, Inc needs to give attention to.

Actually, the word is a legal term of art for a non-binding shareholder proposal. In other words, a request put to shareholders that won’t necessarily stick. It’s used in trusts and wills to convey hope rather than legal obligation, according to Merriam Webster. Precatory is linked to the Latin precari, to pray.

Having served as a CEO of a Public Company, a Public Registered Bank Holding Company, when shareholders speak, particularly large shareholders, Management must listen to their comments and suggestions.

Icahn tells TIME he filed a shareholder proposal with Apple on Nov. 26, three days before the deadline for measures to be voted on at the company’s next annual shareholders meeting. His measure calls for a share buyback and is in the form of a precatory proposal, which means that even if a majority of Apple shareholders approved, it would not be binding on the company’s management. That’s the typical approach for shareholder resolutions, even those coming from investors who are at odds with management.

Apple confirmed to TIME that Icahn filed a precatory proposal, and said its management team and board are acclivity reviewing their current capital return plan. "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," said Apple spokesman Steve Dowling.

In short, a precatory proposal is here to convey hope rather than a legal obligation. Although technically non-binding, a precatory proposal, even if voted, wouldn’t oblige Apple to do anything.

As Steve Shaeffer reports Carl Icahn is suggesting that Apple, should use some mixture of borrowing and or cash on the balance sheet to set off a $150 billion share buyback plan. And yes, there is indeed something to be said for Apple buying back its own stock:

In a letter to Chief Executive Tim Cook Thursday, Icahn revealed he has increase his stake in the iPhone-maker to 4.7 million shares and called for an immediate tender offer from the company to repurchase $150 billion in stock at $525 per share, funded by some combination of debt and cash on hand.

According to Icahn, the move would immediately increase earnings per share by 33% (by reducing the share count) and send the stock price to $1,250 within three years. He also said he would pledge n0t to tender any of his shares in the buyback.

One advantage of this is that by handing the money back to shareholders the executives at Apple will relieve themselves of the temptation to do something stupid with all that money. As an example, I know of at least one major investor who was near paranoid that Vodafone VOD -0.51% would keep the money it got from the Verizon Wireless sell off. The worry was that Vodafone executives would only waste it on some grand plan.

A second point is that Apple quite obviously doesn’t need to have $150 billion in cash or near cash on its balance sheet. It absolutely doesn’t need to have that much to finance its operations and most of it is just sitting in very low yielding short term paper. There’s no reason at all to have a computing company doing that on behalf of shareholders.

However, there are a couple of flaws or problems in the Icahn plan as well. The first is that his letter doesn’t seem to acknowledge that a large part of Apple’s cash reserves aren’t actually available to it. Around $100 billion of those reserves are in fact foreign profits which have not paid US corporate income tax. That tax payable on those profits should Apple bring them back into the US (which it would have to do if it were to either pay down debt used to make a buyback, or if it used it directly to finance one) would be around and about $30 billion. Thus while it appears that there’s a symmetry between a $150 billion cash position and a $150 billion buyback some of that cash position is in fact illusory.

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