Motorola, Icahn publicly vie for shareholder allegiance
By Colleen Taylor, Contributing Editor -- EDN, May 1, 2007
The high-stakes corporate battle continues to heat up between the current members of Motorola Inc.'s board of directors and the board's prospective party-crasher, famed billionaire shareholder activist Carl Icahn.
Trading a series of barbs today in public statements bordering on invective, the company's current board and Icahn have each upped their attempts to secure the attention and allegiance of Motorola shareholders in anticipation of the May 7 vote on Icahn's pursuit of a board position.
Icahn, a 71-year-old New York native, made his name as a Wall Street raider after heading up a hostile takeover of airline TWA in 1985. In recent years, his investments have included Blockbuster Inc., Imclone, Time Warner Inc., and several Las Vegas casinos.
Time has not proven to slow Icahn's corporate crusades; indeed, in January, he publicly set his sights on a spot on Motorola's board. In the months since he has lobbied hard for shareholders' support, promoting himself as "an individual selected outside of the nomination process under which all board members are nominated by existing Motorola directors." He currently holds 2.9 percent of the company's stock.
In an open letter published via a full-page ad in today's Wall Street Journal, Icahn wrote that Motorola has "stumbled, and stumbled badly" under its current management, turning it into an undervalued company ripe for more "stockholder representation in the boardroom." Icahn's letter also took direct aim at Motorola's current CEO Ed Zander, whom Icahn characterized as laughably out of touch. Citing media reports in which Zander was quoted as saying "I love my job. I hate my customers," Icahn called Zander's attitude "like something straight out of Alice in Wonderland."
In response to Icahn's open letter, Motorola's current board fired back today with his own public message to shareholders. In a letter signed by Zander urging shareholders to vote against Icahn's nomination, the company said that Icahn does not "understand the company and its needs." The board added that it has garnered support in its opposition to Icahn from independent proxy firm Glass Lewis, which has stated its belief that "neither the size nor length of his holdings in Motorola should automatically qualify him as a director of the company." Meanwhile, Icahn has cited his own endorsements from proxy advisory firms Institutional Shareholder Services and Proxy Governance Inc.
For its part, Motorola has undertaken efforts of its own to change the company's course. In January, Motorola announced plans to cut 3,500 jobs, or 5 percent of its workforce. And in March, the company announced a slew of major changes in leadership, naming Greg Brown the company's new president and COO and naming Thomas J. Meredith the company's acting CFO. But despite the attempts to spur a rebound from months of financial failings, at present Motorola continues to suffer. Last month, the company posted what its CEO called an "unacceptable" Q1 earnings report that included an operating loss of $366 million.
