When I launched my own activist hedge fund earlier this year, I deliberately bought no Motorola shares (although I still own some personally). Based on Motorola's inaction since I began my campaign, I couldn't look my own shareholders in the eye and justify an investment in the company. However, I still feel a sense of loyalty to the many people who joined up with my campaign last year and want to see this company finally right itself. Many of the 130 people who "pledged" their shares with me last year were current or former Moto employees. Some of them have recently contacted me and asked my opinion on how they should vote their shares at the upcoming Motorola annual meeting on May 5. To them, I say: You have the power to finally improve this company by how you vote your shares.
A Bureaucratic Board
Motorola's board is highly dysfunctional. At 14 members, it's too large and bureaucratic. In my experience, when boards get larger than 10 members, they become more formal, there is less time for discussion and debate and the directors are more reluctant to speak up. It becomes less like a meeting of high-level advisers wanting to understand the growth of the business and protect the interests of shareholders and more like a slow day at the U.N. General Assembly. Motorola has some very strong members (including its new Chairman David Dorman, who used to run AT&T ( T), and Tom Meredith, who has been acting CFO since last year and formerly Dell's ( DELL) CFO). And although the two new Icahn reps should help matters, this board needs an overhaul. This group, charged with overseeing and monitoring the state of Motorola on behalf of shareholders, clearly shares the blame for what has happened. Yet, all the incumbent directors from last year (except Zander) are up for election again this year. That's simply wrong. What's particularly puzzling is why Samuel Scott III, Judy Lewent, Nicholas Negroponte and Dr. John White are still on this board. I don't have anything against the backgrounds or experience of them, but each of these directors has been on the board for more than 10 years. That means they've had a front row seat to the two boom-and-bust cycles of the StarTac and the Razr. How could they let exactly the same problems occur twice under their watch? Even in the best performing companies, no director (unless they're a founder or critical officer) should be on a board for a decade. Fresh eyes should be periodically cycled into the group to ensure it never becomes too clubby. For a company that's lost half its value in the last decade, it's unconscionable to have four directors with such a lengthy tenure. (Scott's actually been on the board for 15 years.) Unless you're the owner or the owner's child, you don't get to drive out half the value in a company over 10 years and keep your job.