Carl Icahn names five-person dissident slate for Lions Gate board
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Dissident shareholder Carl Icahn nominated five members to the board of Lions Gate Entertainment, two short of a majority needed to seize control of the 12-member board but enough to give him a substantial say in management of the company.
Among the nominees is Chris McGurk, a former chief operating officer of Metro-Goldwyn-Mayer who has been advising Icahn behind the scenes for several months.
Icahn, who controls 33.5% of the Santa Monica-based film and TV studio, had been threatening for more than a year to wage a proxy contest for control of Lions Gate, which is scheduled to elect a new board at its Dec. 14 shareholders meeting. Even so, despite Icahn’s position as the largest shareholder, it’s not clear whether he wields enough votes to see all five of his nominees elected.
In a surprise, Icahn did not nominate either himself or his 31-year-old son, Brett, to the board. Brett Icahn has played a key role in discussions between the Icahn camp and Lions Gate management, and many observers had expected one or both to be nominated.
Indeed, foreseeing a potentially contentious shareholder vote, Icahn sought a slate of nominees calculated to give him the best chance of success, said a person familiar with the situation.
Icahn’s nominees all have connections to him in the business world, but McGurk is the only one with experience working at a U.S. studio. The other nominees are:
- Jay Firestone: Chief executive of Canadian film and television production company Prodigy Pictures. Because Lions Gate is legally domiciled in Canada, eight of its board members must be citizens of that country. When Firestone previously worked at Canadian entertainment giant CanWest Entertainment and Icahn owned film company Stratosphere Entertainment, the two partnered on a film marketing and distribution joint venture called IDP.
- Michael Dornemann: A former chief executive of German music and television company Bertelsmann Entertainment. He currently sits on the board of video game publisher Take-Two Interactive, on which Icahn has three representatives, including his son, Brett.
- Daniel Ninivaggi: The president of Icahn’s investment firm since April. He was previously an attorney at the New York corporate law firm Winston & Strawn and an executive at auto parts company Lear Corp.
- Harold T. Shapiro: A professor of economics and public affairs at Princeton University who previously served as the university’s president. He is also chairman of the board of for-profit college company DeVry Inc. and a native of Canada. Icahn is an alumnus of Princeton.
In a filing with the Securities and Exchange Commission, Icahn urged shareholders to vote a ‘card’ giving him authority to vote their shares. The billionaire corporate raider also named the incumbent board members whom he would vote against. Most notable is Vice Chairman Michael Burns, Lions Gate’s No. 2 executive.
However, Icahn said he would vote to keep Chief Executive Jon Feltheimer, whom he has previously said he wanted to oust.
In a statement issued Friday, Lions Gate claimed that it is on the right track and that voting for Icahn’s board nominees would be a mistake.
‘Mr. Icahn has not articulated a vision for Lionsgate regarding how he would improve on [the company’s] results,’ the statement said, ‘and his nominees provide no further clarity on the critical issue of leading Lionsgate into the future.’
During the next several weeks, Icahn is expected to make an aggressive public push to win other shareholders to his side. It won’t be an easy task to get votes representing a majority of the stock, since Lions Gate’s largest shareholders after Icahn, including Mark Rachesky, Gordon Crawford and John Kornitzer, who together own about 40% of the company’s stock, have been supportive of management. In addition, Lions Gate executives own about 4% of the shares.
Key to the efforts of both Lions Gate and Icahn to win votes will be Institutional Shareholder Services, the Wall Street advisory firm whose recommendations on proxy votes are often followed by large investment funds. Both sides are expected to make presentations to ISS soon in an attempt to win its support.
Lions Gate previously announced that its entire 12-person board of directors would stand for reelection with the exception of Brian Tobin, who is being replaced on the company’s slate by Frank Giustra, founder of the company who previously left his post as chairman in 2003.
Icahn, who is embroiled in two lawsuits with Lions Gate, has an outstanding tender offer to buy a majority of the company’s stock at a price of $7.50 a share that expires Dec. 2. It has been extended four times amid ongoing drama at Lions Gate, including an unsuccessful bid to merge with MGM.
Lions Gate stock closed at $7.44 on Friday, down 1 cent.
-- Ben Fritz