Icahn Sues for Motorola Board Records

Motorola yesterday dismissed as an "unnecessary distraction" billionaire investor Carl Icahn's legal efforts to force it to turn over documents about its executives and its cellphone business.

Icahn plans to use the material in his battle to win four seats on the Illinois company's board. Motorola prevailed in a similar proxy battle with Icahn a year ago.

"Over the past 12 months the statements and predictions of Motorola's management and the board about mobile devices business have too often proven to be wrong," Icahn said in a statement.

Icahn sued the company for the documents yesterday in the Delaware Court of Chancery.

"We demanded these materials for the purposes of enabling us to investigate whether and to what extent the board of directors of Motorola failed in their duties as directors in supervising management and setting policy and direction of Motorola," he said.

Motorola said it rejected Icahn's "demand for extensive access to its books and records" earlier this month on the belief that he does not have a credible basis to request such an inspection.

"Motorola had offered Mr. Icahn access to information concerning Motorola pursuant to a customary confidentiality agreement, but Mr. Icahn chose not to avail himself of that opportunity and instead seeks to create further unnecessary distraction," the company said in a statement.

Icahn has nominated former Viacom chief executive Frank Biondi, WR Hambrecht founder and chief executive William Hambrecht, Massachusetts Institute of Technology professor and semiconductor materials processing expert Lionel Kimerling, and Icahn Enterprises chief executive Keith Meister for Motorola's board.

In his lawsuit, among other materials, Icahn is seeking board documents related to a potential spinoff of the cellphone unit, the service and selection of Motorola's senior officers, and materials related to the use of company aircraft by senior management, board members and their families.

Icahn, who has been steadily increasing his Motorola position, disclosed in a filing this month that he owns 142 million shares, or 6.3 percent -- up from 5 percent a month ago.

Icahn said in a letter to Motorola stockholders that the company "assured us during last year's proxy contest that they had a plan to right the ship." Instead, he said, the results in the cellphone division "are a stockholders' nightmare."