Major Navistar shareholder fires boardroom broadside

As if they didn’t have problems enough, the board of directors of America’s troubled Navistar Corporation has received a stinging open letter from major shareholder Carl C. Icahn, citing ‘abysmal business decisions and poor corporate governance.’

Carl C. Icahn is, in fact, one of the largest shareholders in Navistar International Corporation, holding nearly 15 percent of the corporation’s stock while Navistar is the corporate master of International and leading partner in the Cat Trucks operation.

Calling for a seat on the Navistar board for each of the four major shareholders who collectively hold 60 percent of Navistar stock, Icahn’s long letter was ferocious in its description of the board’s performance.

‘I am led to the inevitable conclusion that Navistar is a company with a Board asleep at the switch,’ he declared. ‘This is a Board at war with its own shareholders.’

Continuing the tirade, Icahn’s letter asserted, ‘This Board has stood idly by for the last three years as Navistar, unique among its competitors, has been unable to deliver an engine that conforms to EPA 2010 guidelines. In the last two and half years, Navistar market share has declined by 40% (from 25% in 2010 to 15% in the most recent quarter) in the Class 8 market. Share price has declined precipitously from almost $60 per share at the beginning of 2011 to under $25 per share. During this time, this Board has authorized spending shareholder money on lawsuits against suppliers, competitors and regulators, marketing plans to convince customers that non-compliant engines are actually compliant, accumulating non-core assets such as a recreational vehicle manufacturer, and a ‘gold-plated’ corporate headquarters that cost over $100 million.

‘The one thing this Board refused to spend money on was a back-up plan involving the industry standard technology Navistar now must rely on.’

Carl C. Icahn was particularly scathing of the appointment of former Textron chief Lewis Campbell as chairman and interim chief executive officer at Navistar.

‘I cannot fathom how this abysmal track record has earned this Board the right to pick a new CEO or a new product strategy. Now that we have come to the culmination of a crisis of at least 3 years in the making, this Board has chosen to bring in a temporary CEO with zero experience in the heavy truck industry and a questionable track record as CEO of Textron.’

However, the written assault ended with Icahn seeking an amicable resolution.

‘I would prefer to amicably resolve this matter now, rather than fight. I believe that requires that at least four directors be designated by shareholders and added to the Board immediately. For all of our sakes, I hope that you agree,’ he concluded.

Navistar’s response, however, was somewhat less assertive, stating simply, ‘The Navistar Board takes its fiduciary duties very seriously (and) 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.

“Navistar maintains an ongoing dialogue with its shareholders, and appreciates their input and views. As such, after a year of dialogue, 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.’
Many are eagerly waiting for the next round of correspondence.