Motorola urges stockholders to keep Carl Icahn off its board

By Lisa Kerner

Charlotte, N.C., May 3 - Motorola, Inc. once again urged stockholders to vote for the election of its directors in an open letter released Thursday and also fired back at remarks made by investor Carl Icahn during a CNBC broadcast on May 2.

In the televised interview, Icahn said he suggested "another large shareholder" who could serve in lieu of himself, the open letter from chairman and chief executive officer Edward J. Zander stated.

Zander denies that Icahn provided such a name.

"Although we offered to work with Carl Icahn to identify two mutually acceptable, well qualified independent directors to add to your board - one immediately, and an additional candidate as soon as practicable - Carl Icahn has refused to cooperate," Zander wrote.

Zander also took issue with Icahn's suggestion that Keith Meister, an employee from his hedge fund staff, be added to the board. Icahn had sought to nominate Meister in 2003 to a company's board of directors, a move that was questioned by the company's proxy advisory firm.

"Carl Icahn already serves on a staggering number of boards, sitting on as many as eight boards and serving as the chairman of at least four. On top of that, Carl Icahn is currently committing significant time and resources to an attempted takeover of WCI Communities (where he is also seeking a board seat in yet another proxy contest)," the letter said.

Zander also questions Icahn's willingness to "dump" some of his other board memberships so that he has "less than six" directorships.

"We think this willingness to 'dump' his other board memberships reflects a lack of commitment and dedication and raises doubts as to the length of time Carl Icahn expects to serve on any given board, including Motorola's board. We are also curious - as you should be - which board memberships he plans to 'dump'," Zander said.

On May 2, Carl Icahn and Motorola exchanged heated words in news releases as the result of a replay of a Nov. 1 Icahn interview that aired May 1 on CNBC. The topic of Icahn's interview was serving on multiple boards of directors.

Motorola highlighted Icahn's own words in its bid to keep him off the board. In the interview, Icahn said, "How can a guy be on eight boards and know what the hell he's doing? These companies are complicated and you have tremendous competition from abroad. How can somebody sit on a board - even if he's the smartest guy in the world - if he was Einstein - and understand what that company is doing?

Icahn, on the defensive, did not address the interview replay in his statement, preferring to disagree with Motorola's claim that since April 2003, the company has achieved 30% annualized returns. Icahn said that since Dec. 3, 2004 (the first trading day following the distribution of Freescale shares) Motorola has achieved negative 0.3% annualized returns.

"Motorola's destruction of $20 billion of market value over the last 6 months and its failure to create any improvement in share price over 2½ years is, in my opinion, completely unacceptable," Icahn's statement said

In an April 18 letter to Motorola shareholders, Icahn vowed to serve as "an active, engaged director of Motorola, unafraid to demand management accountability and to ask the tough questions that appear to me to have gone unasked."

In addition, Icahn noted his "expertise in finance and overall business judgment" as well as his success in industries as diverse as telecom, automotive, oil and gas, gaming, real estate and biotechnology.

On Feb. 28, Icahn announced plans to acquire between $119.7 million and $500 million of the Schaumburg, Ill., communications company's common stock.

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