NEW YORK (Reuters) - Billionaire investor Carl Icahn slammed Navistar International Corp (NAV.N) for naming a new chief executive without consulting large shareholders, and urged the company to offer four board seats to shareholders immediately.
Navistar board’s recent decision to appoint Lewis Campbell as chairman and interim CEO was “worse than ill-advised”, since it did not discuss the decision with Icahn and three other shareholders who collectively own nearly 60 percent of the company, Icahn said in an open letter to the board on Sunday.
The embattled U.S. truck and engine maker last month replaced CEO Daniel Ustian with Campbell, a former head of Textron Inc (TXT.N), after its bet on a new generation of diesel engines failed to live up to its promise.
“It is ... outrageous that you have not reached out to obtain our opinion on issues such as choosing a new management team to lead this company,” said Icahn, who holds a roughly 15 percent stake in the U.S. truck and engine maker.
“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,” Icahn said.
The investor said he would prefer to resolve the matter amicably rather than through protracted litigation and a proxy fight, but at the same time is seeking access to corporate documents and board proceedings at Navistar in order to protect his investment.
“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... before any more damage is done to our company by the existing board,” Icahn said.
Navistar representatives were not immediately available for comment outside regular business hours.
The Lisle, Illinois-based company was hit hard by its failed engine strategy and has withdrawn its 2012 earnings forecast, sending its shares down to just over $27 per share currently from almost $60 at the beginning of 2011.
For much of the past year, Navistar had been struggling to win approval from the U.S. Environmental Protection Agency for a novel diesel engine technology that would cut emissions of nitrogen oxide, a pollutant linked to asthma, without using urea.
Icahn said Navistar’s board “has stood idly” by for the last three years continuing to support these failed strategies and therefore it did not have the right to pick a new CEO or a new product strategy.
He also questioned Campbell’s track record at Textron, saying Campbell watched Textron stock go from over $37 per share to $20 per share during his 11-year tenure.
About 45 percent of Navistar’s outstanding stock is held by three big investors: Icahn, hedge fund MHR Fund Management and asset manager Franklin Resources Inc (BEN.N).
Navistar adopted a “poison pill” defense in June, intended to keep any investor from acquiring a 15 percent or greater stake in the company. It would allow existing investors with less than a 15 percent stake to buy new shares in the company at half price, which would dilute the holdings of anyone with more than 15 percent.
Reporting by Soyoung Kim in New York; Editing by Eric Meijer