Icahn blasts Motorola board in open letter

Billionaire investor Carl Icahn appealed to Motorola shareholders to elect him to the company’s board in a letter dated yesterday. In the letter, which will be mailed to shareholders along with proxy ballots allowing them to elect him for the board, Icahn pledged to apply his business expertise to improve Motorola’s management and to be an active voice for shareholders disappointed with the company’s recent performance.

In the letter, Icahn blasted Motorola’s board for several shortcomings, including the surprise drop in fourth-quarter earnings the company reported for its mobile business and its lowered expectations for 2007. “In my view, an engaged board of directors should have been able to help Motorola avoid the missteps that currently plague its business, or at least to have identified and addressed those problems earlier,” he wrote. “My experience tells me that Motorola's problems reflect not only operational failures but are also symptoms of a passive and reactive board. Clearly our board members' top priority should be to hold management accountable for fixing Motorola's current operational problems. If I am elected to the board, I will do so.”

Asking shareholders to vote for him, Icahn cited his nearly 40 years of corporate experience as well as his personal investment in Motorola, which he argued distinguished him from the firm’s existing directors. Icahn and his affiliates own more than 68 million shares of Motorola, or nearly 3% of all outstanding shares.

Icahn, 71, currently sits on the boards of several public companies, including investment funds CCI Onshore and CCI Offshore, American Property Investors, XO Holdings (which owns telecom carrier XO Communications), biopharmaceutical firm ImClone Systems and video retail chain Blockbuster. But should he be elected to Motorola’s board, Icahn promised in the letter to restrict himself to fewer than six public corporate boards.

“I had hoped that the existing board would have simply added me as a new member without the distraction of a proxy fight,” Icahn wrote. “I fail to understand why, during these difficult times, when they could obviously potentially benefit from a fresh perspective, Motorola refuses to put me, a large shareholder with significant business experience, on the board.”

Should he join the board, Icahn also predicted no bad blood between him and the other directors, despite his criticism of them. But he added, “I do view it as a working relationship, not a social one.”

“My role as a board member is to make sure that the board is well aware of what is going on at the company, to ask the tough questions and require that they be fully answered, to speak out before problems manifest themselves (such as those that Motorola is now trying to work its way out of), and to hold management to a high standard of excellence,” he wrote. “My biggest concern for Motorola is that board members may wait too long to speak up in the face of continued operational failures, allowing our company to slip into a steep decline. I assure you, with me as a board member, that would never happen.”