ITT Severance Plan Would Protect Workers in Takeover
ITT Corp. has proposed a $165-million severance plan to protect 650 executives and employees if a hostile takeover bid by Beverly Hills-based Hilton Hotels Corp. is successful.
ITT spokesman Jim Gallagher said the plan was a “worst-case scenario” that would be implemented only if Hilton succeeds in its $8.3-billion bid and fires the employees.
Hilton has said the takeover would save $100 million, “which means you’re going to fire a lot of people,” Gallagher said.
The proposal was included in a regulatory filing with the Securities and Exchange Commission on Tuesday. The filing did not outline how the money would be divided.
A Hilton spokesman could not be reached immediately for comment.
The filing also indicated that ITT’s hotel and casino business, which includes the Sheraton and Caesars World chains, would take the ITT Corp. name after the completion of a planned three-way split.
When the split was announced last month, New York-based ITT said the hotel business would be called ITT Destinations Inc., and its telephone directory business would be called ITT Corp. The directory business instead would be called Information Services Inc.
The business comprising ITT’s technical schools would be called Educational Services Inc.
The filing also said the new ITT board of directors would have staggered terms, unlike the current board, which faces shareholder confirmation at each annual meeting.
Such a provision would make a hostile takeover difficult to complete.
Each of the 11 directors would serve three years, with the first four being elected in November. Hilton has nominated its own slate of directors for ITT, which until now held its annual meeting each May.
ITT delayed this year’s meeting, saying the postponement would give shareholders more time to decide on Hilton’s offer. But the breakup is to occur before the meeting, which must be held by November.
Hilton is trying to block the spinoff. A federal judge is scheduled to hear arguments on Sept. 29.
Hilton last month raised its takeover bid by 27% to $70 a share after ITT announced the split-up plan.
On Wednesday, ITT shares were unchanged at $62.38; Hilton shares fell $1 to close at $31.56. Both trade on the New York Stock Exchange.
