Billionaire activist sues Motorola
March 25, 2008
Carl Icahn
Billionaire activist Carl Icahn has filed a lawsuit against Motorola Inc. to get hold of the records relating to Motorola’s mobile phone business strategy.
Mr. Icahn’s lawsuit, filed in the Delaware Court of Chancery, seeks board and committee minutes and documents relating to the service and selection of Motorola’s senior officers, the strategy of Motorola’s mobile devices business and the realignment of its business regarding mobile devices.
“Over the past 12 months the statements and predictions of Motorola’s management and the board about mobile devices business have too often proven to be wrong," Mr. Icahn said in a letter to Motorola shareholders.
"We want to ascertain what the board could have done in the exercise of its fiduciary duty to assure Motorola stockholders that Motorola’s statements and predictions were not incorrect and would not provide Motorola stockholders with an inaccurate perspective on the prospects for the mobile devices business,” the letter said.
Mr. Icahn is president of securities firm Icahn Group, one of handset maker Motorola's larger stockholders.
“We demanded these materials for the purposes of enabling us to investigate whether and to what extent the board of directors of Motorola failed in their duties as directors in supervising management and setting policy and direction of Motorola,” Mr. Icahn pointed out in his letter.
“We intend to share with Motorola’s stockholders information obtained pursuant to the request as part of our proxy battle with Motorola," he said. "Motorola has responded that they will not comply with our demand.”
In his letter, Mr. Icahn urged Motorola shareholders to elect Frank Biondi Jr., William R. Hambrecht, Lionel C. Kimerling and Keith Meister as directors of Motorola at the 2008 annual meeting.
Motorola’s mobile device business has steadily lost market share over the past 18 months due to the emergence of heavy competition.
“Results in Motorola’s mobile devices business have gone from bad to worse,” Mr. Icahn wrote. “2008 was supposed to be a successful and profitable year in mobile devices with the potential to achieve 10 percent operating margins in the near future. Instead, the results are a stockholders’ nightmare.”
Mr. Icahn would like access to documents provided to Motorola’s board of directors regarding matters disclosed in Motorola’s press releases and conference calls concerning its performance, improvements or changes in the mobile device business that have not materialized.
He is also hoping to inspect documents showing the use of Motorola’s aircraft and other property by members of senior management and the board of directors and their families, including the use of the aircraft for personal reasons. He is asking for all records regarding reimbursements to Motorola.
“It is essential to the future of Motorola that its directors realize that the board, especially at this precarious time, is not a country club or a fraternity and that truly qualified people whose interests are truly aligned with stockholders are needed on the board in order to save Motorola,” Mr. Icahn wrote.
“Last year I argued that Motorola needed true stockholder representation on the board," he said. "Unfortunately, we lost that battle in a close election. Motorola’s board and management made enough empty promises to convince stockholders to give them another chance to get it right. They didn’t.”