Icahn Picks Panel to Keep an Eye on USX Board : Steel: The investor says his committee will check on whether the firm restructures the way he wants. If not, he’ll seek to replace the directors.
Investor Carl C. Icahn unveiled a “shareholder enhancement committee” for USX Corp. on Wednesday and said its five members would seek election to the board next year unless the Pittsburgh-based conglomerate restructures itself along lines he wants.
Icahn, who owns 13.3% of the steel and energy firm once known as U.S. Steel Corp., portrayed the committee as a “liaison” between USX and shareholders. It is headed up by well-known shareholder-rights advocates.
In a letter to USX Chairman Charles Corry spelling out plans for the committee, Icahn--himself the chairman of Trans World Airlines, which he took over in 1985--said the group wouldn’t seek board seats if USX enacts “a meaningful restructuring plan and corporate governance changes.”
The restructuring refers to Icahn’s longstanding effort to get USX to spin off its steel division, which he says has depressed the price of USX stock. About 70% of USX sales and 80% of profits this year have come from its Texas Oil & Gas Co. and Marathon Oil Co.
Icahn lost a proxy fight on the issue last May, when shareholders defeated a proposal requiring the board to split the steel and energy divisions into two corporations to be owned by existing shareholders.
However, USX has since taken steps toward selling at least part of its steel operations. Last month, its board approved the transfer of USX’s steel division to a wholly owned subsidiary in what is viewed as a precursor to the sale of those assets, either to the public or various steel companies that have shown interest.
As to Icahn’s latest thrust, USX said it “will review (his) demands in due course.”
In his letter to Corry, Icahn applauded his “apparent change of heart” and urged that any proceeds from the sale of steel assets go directly to shareholders as a special dividend.
Just how the special shareholder committee fits into Icahn’s strategy wasn’t immediately clear. But one of its directors, Harvard University Prof. John Pound, said it “absolutely isn’t” a prelude to a takeover attempt.
Compared to the hostile takeover efforts of the 1980s, it is “a less confrontational mechanism” for making publicly held corporations more accountable to shareholders, said Pound, who heads a corporate voting research project at Harvard’s Kennedy School of Government.
Pound and Stanford University law professor Ronald Gilson are co-chairmen of the group, which also includes Darius Gaskins, former Burlington Northern Railroad chief executive who now is a Harvard economist; Paul Quirk, head of the Massachusetts state pension fund board, and Katherine Schipper, professor at the University of Chicago business school.
According to Icahn’s letter, they will consult with shareholders on various issues, including the steel spinoff. Icahn is paying the members $15,000 each and giving them 300 shares of USX stock, which was worth $32.125 a share at the close of trading Wednesday on the New York Stock Exchange. Pound and Gilson will get an extra $7,500 as co-chairmen.
Icahn said he was paying them in advance “to ensure the independence” of their findings. However, he said they all agree with him that “U.S. corporations in general have lost their competitive edge in world markets because managements are not held truly accountable to shareholders, the real owners of our public corporations.”
