Icahn Appears Shut Out of Motorola Board
Posted on: Tuesday, 8 May 2007, 06:00 CDT
By Michelle Kessler
Motorola's boardroom brawl appears to be over. Dissident shareholder Carl Icahn appears to have been bested by management.
Icahn, a wealthy financier with a big stake in Motorola, told shareholders at the company's annual meeting Monday that he expected his bid for a board seat to fail. Motorola said late Monday that its preliminary tally shows the same result. However, since the race was so close and contentious, the No. 2 cellphone maker hired an outside firm to count shareholder votes. Official results won't be in for about three weeks.
The news, released after markets closed, sent Motorola shares down less than 1% in after-hours trading.
Shares have fallen about 3% since early March, when Icahn began lobbying for a board seat. He and his associates own nearly 3% of Motorola's shares and want a bigger say in how it is run.
CEO Ed Zander and the board opposed the bid, saying Icahn has little expertise that can benefit Motorola. The two sides fought a very public battle, with Icahn calling for Zander's ouster if he can't quickly turn Motorola around.
That's a dangerous distraction for the troubled company, which lost money in its most recent quarter, says tech analyst Neil Strother at JupiterResearch. In the competitive cellphone industry, "if you slip up," he says, there are companies such as No.1 Nokia that are "going to eat your lunch."
The battle threatened to emphasize short-term profits over long-term strategy, says Jeffrey Sonnenfeld, a governance professor at Yale University. Zander, in charge since 2004, hasn't been given enough time to implement a tough turnaround plan, he says. Icahn and some other shareholders just want a quick return, he says.
The shareholder battle might have benefited Motorola, says Charles Elson, a corporate governance professor with the University of Delaware. "It forces the board to re-examine their course," he says. Zander recently stepped up stock buybacks after Icahn expressed concerns about shareholder return. (c) Copyright 2005 USA TODAY, a division of Gannett Co. Inc.
Source: USA TODAY
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