Carl Icahn, one of Navistar’s single largest shareholders, late Sunday, Sept. 9, issued an open letter to the company’s board of directors questioning its recent business decisions and recommending that Navistar make four board seats available to shareholders. Navistar issued a statement Monday morning, Sept. 10, expressing its “disappointment” in Ichan’s letter.
Icahn, who currently holds about 15 percent of common Navistar stock, attempted to gain control of the Lisle, Ill.-based company earlier this year as its technological and financial problems grew. Navistar blocked his takeover efforts by adopting a “poison pill” corporate stock strategy.
In his letter Sunday, Icahn described Navistar as a company “at war with its shareholders” and demanded the company include them in the decision-making process as it attempts to recover from its protracted battle to develop an exhaust gas recirculation-only diesel engine to meet U.S. Environmental Protection Agency 2010 emissions regulations. Navistar’s competitors elected to use selective catalytic reduction-based technology.
”I urge you to reconsider the path the board has chosen, which harms our company and puts you at serious risk of personal liability,” Icahn wrote. “Instead, I recommend that you permit the voices of shareholders to be heard directly at the board level by making four board seats available to shareholders immediately – at this critical juncture in the history of Navistar – before any more damage is done to our company by the existing board.”
Icahn went on to list what he considered to be the Navistar board’s failings during the EGR-SCR war and his lack of faith in its ability to understand and rectify the numerous problems facing the company today. The letter, Icahn wrote at least twice, was an effort to encourage the Navistar board to immediately include shareholders in strategic decisions without a “lengthy” and “protracted” legal battle as the company shifts toward SCR technology next year.
Navistar released a statement Monday morning, Sept. 10, saying that its board “takes its fiduciary duties very seriously and is committed to acting in the best interest of the company and all of its shareholders. Navistar has recently taken a number of important actions, including appointing new leadership, defining and beginning to implement a new clean engine solution, accelerating cost-reduction actions and undertaking a review of its non-core businesses, all with the goal of driving long-term profitability and delivering shareholder value.”
The company says it “maintains an ongoing dialogue with its shareholders, and appreciates their input and views. As such, after a year of dialogue, we are extremely disappointed that Mr. Icahn has chosen to pursue his unproductive tactics of threats, attacks and disruption rather than continuing constructive engagement, particularly at this important time for Navistar. Rest assured, the board and management have a clear path forward and are focused on executing on their plan and delivering value to shareholders.”