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On the heels of a second activist campaign targeting Motorola Inc., Carl Icahn, on Tuesday, Feb. 5 pleaded with institutional investors to support his efforts at American corporations. "The real major problem in our economy is that companies are run very poorly and you have no idea how badly they are run until you get inside there," Icahn told institutional investors, brokers and investor relations officials at investor advisory group RiskMetrics' 2008 governance conference in New York. "You people [institutional investors] can do something about it and if everyone does what I tell them to do, I think I will be out of a job." Icahn on Feb. 1 launched a second proxy contest at Motorola. The effort comes only a few months after Icahn lost last year's campaign to elect a director candidate to Motorola's board. His drive fell short by a couple hundred million votes. He declined to comment on the campaign nor reports that he has accumulated a substantial position in retailer J.C. Penny Co. Icahn made the case for activism generally by pointing in part to the executive pay. He also pleaded with institutional investors to oppose anti-takeover provisions such as poison pills and staggered boards at corporations. "It's a shame that you people who have key votes, don't understand how bad the situation is," Icahn said. "It's really pathetic out there because you have CEOs who earn 400 times what the average worker earns. You hate to say it but its really stealing with all these boondoggles going on out there." Icahn also announced he is setting up a website, Icahnreport.com, to communicate with institutional investors on governance issues such as director elections and anti-takeover devices. He told reporters the website will not deal with specific activist campaigns. In a discussion with reporters after his formal remarks, Icahn said he was disappointed the Securities and Exchange Commission didn't approve a rule that would give investors the ability to nominate one or two director candidates on corporate ballots. He acknowledged that institutions could be less likely to support his proxy battles should they have other means of holding companies accountable, but he approved of bringing the measure forward anyhow. "If they had this thing to hold over corporate boards, CEOs would be held more accountable. I'm talking myself out of a job." But Icahn added that at least for the present time he believes campaigns launched by his investment vehicle, Icahn & Co., will continue to have traction with investors. "These deals have become simpler for me now because of my reputation," he said. In comments to the conference, Icahn refuted the perception that he was predominantly interested in raiding companies for their cash. Icahn has been criticized for sometimes pushing a company to buy back shares or issue a special dividend rather than improve long-term operating performance. One oft-cited example is his campaign targeting tobacco and ginseng maker KT&G Inc. in South Korea. There, Icahn and activist fund Steel Partners II pressured the company to make a stock buyback, which it ultimately did. Icahn cashed out after a roughly year-long campaign, pocketing $111 million. But Icahn pointed out that in numerous situations he is able to gain control of companies, which he typically injects with capital. Icahn owns a number of companies in a wide variety of industries including real estate, telecom and industrial sectors. "If you are a raider, you take money out of companies, but I put money into these companies to grow them," Icahn said. Icahn noted that mutual funds have been unsupportive while hedge funds have given him more support, which he attributed to a better alignment of incentives. He also expressed worry about the economy, indicating that the structural and governance changes he would employ are necessary. "I think we got a free ride, I think the guys that run companies have got a free ride," he said. Icahn said the candidate he wanted to endorse is no longer running for president, but he added that of the remaining candidates he would back Sen. John McCain. "I'm against the Democrats. Hillary [Clinton] stands for big government and she would micro-manage everything."  Deal Video
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