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Icahn's blast from the past - June 3, 2008

Carl Icahn stepped up his campaign to rid the world of overpaid CEO--especially those he perceives as standing in the way of his making a killing off their stock or sucking money out of their company--telling the Wall Street Journal today that he will seek to oust Yahoo! CEO Jerry Yang if his bid for board control is not successful. According to the Journal, Icahn's ire was piqued by revelations in a shareholder lawsuit unsealed yesterday regarding the severance packages awaiting Yang and other top executives in the event of a sale to Microsoft, which Icahn estimates could cost they buyer as much as $2.5 billion.

"It's no longer a mystery to me why Microsoft's offer isn't around," Icahn told the Journal. "How can Yahoo keep saying they're willing to negotiate and sell the company on the one hand, while at the same time they're completely sabotaging the process without telling anyone...I'm very cynical about many of the boards and CEO's in this country, but even I am amazed at the lengths that the Jerry Yang and the board went to entrench themselves in this situation."

Just for fun, Media Wonk went back and looked up some stories he wrote a few years ago about another Icahn CEO assault.

From April, 2005:

In a letter sent to Blockbuster chairman-CEO John Antioco, disclosed in a Securities and Exchange Commission filing, Icahn excoriated Blockbuster management for mishandling the failed acquisition of Hollywood Entertainment. He also accused the company of going on a "spending spree" in pursuit of dubious new business plans.

The letter took dead aim at Antioco, calling his recently reported pay package "unconscionable" and finding fault in "the way you are running the company."

The letter put forth a plan of action for Blockbuster's May 11 annual meeting. But it only hinted at areas of appeasement such as sweetened shareholder dividends.

Icahn wrote: "I am determined to put into nomination a slate which if elected will attempt to:

"1) Bring discipline to the spending spree currently in effect, 2) control any further egregious bonuses, 3) strongly urge the board to give greater dividends to the shareholders and 4) be sure that any offers for the company see the light of day.

"If we cannot bring about those changes to our satisfaction, we plan to attempt to take control of the board of directors in the 2006 annual meeting," he said.

And from May, 2005:

DALLAS--Shareholders swept Carl Icahn and his slate of dissident directors onto Blockbuster's board, dealing a sharp rebuke to long-time chairman-CEO John Antioco and raising questions about the future direction of the company.

Although an official tally of the results from the May 11 vote was not released, Icahn said his proxy advisers informed him that his slate won 77% of votes cast, a figure the company did not dispute.

Despite the no-confidence vote from shareholders and Antioco's loss even of a board seat, the newly-elected board moved quickly to reinstate him. In a special meeting by telephone conference call held May 13, the board voted unanimously to create a new seat and appoint Antioco to fill it, the company said. It then reelected him chairman and retained him as CEO.
[snip]
Icahn made clear in his statements following the shareholder meeting that he supported Antioco's reappointment partly to prevent him from pulling the cord on his golden parachute, estimated to be worth as much as $51 million.

Under his contract, losing his seat on the board would give Antioco cause to step down as CEO and take his severance pay with him. Whether he would now be willing to step down without the severance package is unclear.

Antioco, of course, did eventually step down, in March of 2007, with a few shekels in his pocket but not the kingly severance package he had counted on. The stock was at $7 at the time. It closed today at $3.22.

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