| NEW YORK
NEW YORK Feb 12 Corporate bylaw amendments that
prohibit a prospective board member from gaining a board seat if
the person receives compensation from a shareholder undermine
shareholders' rights, activist investor Carl Icahn said on
Icahn, in a posting on his website, said that 33 public
companies had adopted such a bylaw amendment without shareholder
approval as of late November.
The billionaire investor, who is known for taking large
stakes in companies and pushing for corporate management change,
cited Service Corporation International, an operator of
cemeteries and funeral homes, and gaming company International
Game Technology as two companies that have adopted such
measures, which he called Director Disqualification Bylaws.
Icahn, in the article on his website, Shareholders' Square
Table, said such measures bar a person from obtaining a spot on
a company's board of directors if a shareholder nominated the
person and agreed to pay the nominee a fee, including
compensation for a proxy fight.
"It is absolutely offensive for an incumbent board to
unilaterally adopt a Director Disqualification Bylaw without
shareholder approval, and shareholders should also reject a
Director Disqualification Bylaw if their incumbent board puts
one up for a vote in the future," Icahn said.
He said that since shareholders are already fully informed
of compensation arrangements between activist investors and
board nominees under federal securities laws, the bylaw
amendment "undermines the most basic right of shareholders" to
decide who should join a company's board.
Icahn is chairman of investment firm Icahn Enterprises L.P.
and holds substantial stakes in companies including
Apple Inc, Ebay and Talisman Energy Inc
"We'll continue to hold CEOs & boards more accountable &
grow partnerships btwn activists & institutional investors to
help #ShareholderValue," Icahn wrote on social media platform
Twitter on Jan. 8.
On Wednesday, Icahn noted that proxy advisory firm
Institutional Shareholder Services Inc. said in mid-January that
it may recommend a vote against such bylaws.
"The adoption of restrictive director qualification bylaws
without shareholder approval may be considered a material
failure of governance because the ability to elect directors is
a fundamental shareholder right," ISS said on Jan. 13.
ISS in its statement said that it has not recommended voting
against directors and boards that have adopted bylaws
prohibiting nominees who fail to disclose third-party
compensation from taking board seats, saying that "such
provisions may provide greater transparency for shareholders."
Icahn recently took a more than $4 billion stake in Apple
Inc. and had waged a public campaign to get Apple to
return more cash to shareholders.
In a letter to Apple shareholders on Monday, Icahn said he
was ditching his non-binding proposal to force Apple to add
another $50 billion to its stock buyback plan, citing the
company's recent repurchases as well as ISS's call against his