Motorola, Icahn reach truce
Carl Icahn says the agreement will allow Motorola’s soon-to-be separated mobile devices business to "be essentially free from poison pills and staggered boards."
By Suzanne Deffree, Managing Editor, News -- EDN, April 7, 2008
Motorola Inc and Carl Icahn have reached an agreement that will see two of Icahn’ board nominees put up for election at the company’s May shareholder meeting.
The deal, announced this morning, will see William R Hambrecht, founder, chairman, and CEO of WR Hambrecht and Co and co-founder of Hambrecht and Quist, and Keith Meister, a managing director of the Icahn investment funds and principal executive officer of Icahn Enterprises, nominated for election to Motorola’s board. Motorola also announced that Meister, who had been a questionable candidate based on his close ties to Icahn, has been appointed to serve on the board, effective immediately.
In return, Icahn -- who with his holdings currently owns 6.4% of Motorola’s shares, making him the company’s second-largest shareholder -- has agreed not to solicit proxies in connection with the company’s upcoming annual meeting and to vote his shares in support of all of the board’s director nominees.
Further, Icahn is dismissing litigation he brought against Motorola last month that questioned the board’s management of the company. The March lawsuit was Icahn’s latest move in what has grown to a more than year-long campaign to gain greater influence over the company and followed a failed attempt for his own seat on the Schaumburg, Ill-based company’s board.
Much of Icahn’s concern with Motorola’s management had to do with the company’s ailing mobile devices unit, which CEO Greg Brown announced less than two weeks ago would be spun off. The business unit is much of the reason Motorola’s financial results have been struggling, forcing Motorola to lay out a $500 million cost savings plan that has brought on some 10,000 job cuts since the beginning of 2007.
“We are pleased to have reached this agreement with Carl Icahn,” Brown said in a statement. “We look forward to continuing the process we announced on March 26 to create two independent publicly traded companies and we are pleased to avoid a costly and distracting proxy contest.”
"This is a very positive step for Motorola in that shareholder representatives will have strong input into board decisions affecting the future of our company," Icahn said in the same statement. "In addition, the Motorola board has also taken an important step forward for corporate governance in that the separated company which includes mobile devices will be essentially free from poison pills and staggered boards, both of which, in my opinion, serve to make democracy a travesty in corporate America."
Hambrecht, 72, has been founder, chairman and CEO of WR Hambrecht and Co, a financial services firm, since December 1997. Hambrecht co-founded Hambrecht and Quist in 1968, from which he resigned in December 1997.
Meister, 34, since August 2003, has served as vice chairman of the board of Icahn Enterprises GP Inc, the general partner of Icahn Enterprises LP, a diversified holding company. From August 2003 through March 2006, Meister also served as CEO of Icahn Enterprises GP, and since March 2006, Meister has served as principal executive officer of Icahn Enterprises GP. Since November 2004, Meister has been a managing director of Icahn Capital LP, the entity through which Icahn manages third-party private investment funds.
