Carl Icahn, who owns approximately 15 percent of common Navistar stock, issued an open letter to Navistar’s board of directors calling for the creation of four new board seats.
Icahn’s letter describes Navistar as “a poster child for abysmal business decisions and poor corporate governance” and a company “at war with its shareholders.”
He demands Navistar include shareholders in the decision-making process as it attempts to recover from its protracted battle to meet 2010 emissions regulations by relying solely on exhaust gas recirculation technology. Navistar’s heavy-duty engine competitors used selective catalytic reduction to meet the regs issued by the U.S. Environmental Protection Agency.
Navistar, in a prepared statement, said, “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.”
Icahn attempted to gain control of the company this year as the Lisle, IL company’s technological and financial problems grew. Navistar blocked his takeover efforts by adopting a “poison pill” corporate stock strategy.
The letter lists what Icahn considers to be the Navistar board’s failings during the EGR-SCR war and his lack of faith in its ability to rectify the problems facing the company today.
The letter, Icahn says at least twice, is an effort to encourage the board to immediately include shareholders in strategic decisions as the company shifts toward SCR technology next year without a “lengthy” and “protracted” legal battle.
The letter concludes, “This is a Board at war with its own shareholders. I urge you to reconsider the path the Board has chosen, which harms our company and puts you at serious risk of personal liability. 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.”
Navistar’s response also says 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.”