The board of directors of Navistar International Corp (NYSE:NAV) responded to the letter sent by activist investor Carl Icahn regarding his concerns about the future of the company and his opinion that it has become a “poster child for abysmal business decisions and poor corporate governance.”
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In a statement, Navistar’s management emphasized that it is committed in implementing “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.”
The company said, “Navistar International Corp (NYSE:NAV) 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.”
Icahn criticized Navistar’s board of directors in his letter on Sunday. Icahn pointed out that the board of directors failed to reach out to the investors of the company and asked for their opinions regarding the selection of its new management team.
According to Icahn, the selection of Lewis Campbell as chairman and interim CEO was “worse than ill-advised” and the board of directors made no attempt in consulting its shareholders , who are the true owners of the company regarding the strategic decision.
Icahn said the two recent decisions of Navistar International Corp (NYSE:NAV) including the history of the company, its management and board of directors reflected the company’s repeated poor decision making, which led to disastrous results. According to him, “Navistar International Corp (NYSE:NAV) is a company with a Board asleep at the switch, violating its legal obligations and trying to entrench itself to protect the fees and status of Board members, rather than to faithfully perform the primary legal obligation of a board of directors, which is to protect and enhance the investment of shareholders.”
Furthermore, Icahn said the “Board is at war with its own shareholders,” and encouraged them to reconsider their decision citing that it would bring harm to the company. He also added that it would put them in serious risk of personal liability.
He recommended to provide four board seats for the company’s shareholders immediately for them to be able to share their views and opinion directly to the board level.
Icahn also pointed out that he wants to settle the issue amicably, rather through protracted litigation and a proxy fight. Furthermore, he said that he is sure the board of directors has no doubt that he is willing to pursue his objective using both ways if necessary. Icahn holds approximately 15 per cent stake in Navistar International Corp (NYSE:NAV).