Billionaire activist drops lawsuit against Motorola

By Giselle Abramovich

April 8, 2008

Carl Icahn

Motorola Inc. and billionaire activist Carl Icahn, who filed a lawsuit against the handset manufacturer, have settled.

Under the agreement, William R. Hambrecht, founder and chairman/CEO of WR Hambrecht + Co., and Keith Meister, managing director of the Icahn investment funds and principal executive officer of Icahn Enterprises, will be nominated for election to Motorola’s board of directors at the 2008 annual meeting of shareholders and included in the Company’s 2008 proxy statement. In addition, Mr. Meister has been appointed to serve on the board, effective immediately.

“We are pleased to have reached this agreement with Carl Icahn,” said Greg Brown, president/CEO of Motorola. “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.”

Motorola’s board has started a process to create two independent, publicly-traded companies in a strategy restructuring of its businesses as well as position its struggling mobile devices and broadband business for a revival.

The creation of the two independent businesses will consist of a tax-free distribution to Motorola’s shareholders. The distribution will be subject to further financial, tax and legal analysis, resulting in shareholders having shares of two independent and publicly-traded companies.

As part of the settlement agreement, all pending litigation between Motorola and Carl Icahn will be dismissed.

Motorola has even agreed to seek Mr. Icahn's advice on significant matters regarding the intended separation. He will play an active role in the search for a new CEO to head the mobile devices business.

"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," Mr. Icahn said in a 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," he said.