Shareholders shellac Moto’s CEO, board

Contrary to the popular maxim, no news is not good news – at least at Motorola Inc.
Armed only with more promises to revive the badly flagging company, CEO Greg Brown and fellow board members took a beating from their shareholders yesterday, according to news reports of the company’s annual shareholder meeting in Rosemont, Ill.
Brown did not deliver new details on the search for a leader for Motorola’s ailing handset business nor did he give details on the effort to split the company into two publicly traded companies, according to reports.
Instead, Brown simply acknowledged that the company had had a “punishing year,” while reiterating that splitting the company in two was the best course to return the handset business to profitability. The company said earlier this year it would create one company to run its connected home, network mobility and enterprise mobility businesses and another focused on handsets.
In fact, two weeks ago, Brown reported that company-wide revenue was down nearly 40%, operating losses had nearly doubled and handset shipments were down drastically over the year-ago quarter. The company’s value has declined nearly 60% since it began its tumble in October 2006, according to Reuters. The company’s global market share has collapsed to less than 10% from a former high of more than 22%.
Though Brown apparently promised shareholders “wonderful things” to come and an “aggressive” pursuit of a new handset lineup, two weeks ago he said that the company had only an “embryonic portfolio” – perhaps another example of company executives’ rhetorical sleight-of-hand that clearly has enraged shareholders. That includes investor Carl Icahn, who owns about 145 million shares, or more than 6% of the company, and lost a proxy fight for a board seat a year ago. Today, Icahn has only two representatives on an expanded 14-member board.
Nearly lost in the widely reported, angry shareholder rhetoric were the actions taken at the meeting:
– Four new members were overwhelmingly elected to one-year terms on the 14-member board: Brown, Motorola-favored Anthony Vinciquerra, and two Icahn allies, Keith Meister and William Hambrecht (Vinciquerra is president and CEO of Fox Networks Group);
– Motorola agreed to seat Meister and Hambrecht to any committee overseeing the company’s proposed split into two publicly traded companies and, in exchange, Meister, Hambrecht and Icahn agreed to not engage in proxy solicitations or ad hominem public attacks against the company and its executives while Meister and Hambrecht sit on the board;
– if that split into two publicly traded companies occurs, the resulting handset company will adopt no takeover protections, or “poison pills”;
– contrary to trends on the topic, shareholders narrowly approved an advisory-only vote that ratifies or rejects executive compensation plans, dubbed “say-on-pay”;
– shareholders rejected a measure directing the company to recoup “unearned bonuses” from executives who preside over poor financial performance at the company;
– the meeting marked the official end of former CEO and Chairman Ed Zander’s tenure and the beginning of board member Dave Dorman’s ascendancy to the chairmanship.
Perhaps ironically, Icahn has much to lose if Motorola doesn’t revive itself. He purchased much of his massive stock holdings when the shares were trading at about double today’s low of $9.73 per share. Trading by midday had sent Moto’s stock up again by more than 2%.