Tuesday, August 07, 2007

No Response from Motorola's Board to "Plan B" for Les Miserables Shareholders

It's been slightly over a week, since I forwarded the finalized copy of our investor group's "Plan B" for Motorola to the Non-Executive Members of Motorola's Board.

A month ago, when I sent the initial draft copy of the plan to the company before releasing it publicly, I received an email back from Dean Lindroth 3.5 days later. Mr. Lindroth is the new head of Motorola Investor Relations. At the time, he thanked our group for our input.

He said:

"We value inputs from all of our shareholders and appreciate your feedback. I will share your input with the Board Secretary and the management team."

This time, no response.

Late Friday, I called Mr. Lindroth. Although I didn't reach him directly, I left a voice mail for him. I told him that our group consisted of 126 members, owning about 600,000 Motorola shares - including many current Motorola employees. I conveyed that we wished to meet face-to-face or by phone with the Non-Executive Members of the Board at their earliest convenience to discuss the contents of the proposed plan and possible next steps. I suggested that I thought we could find a positive solution for the company, its employees, and its shareholders through such constructive dialogue.

Instead, we've had no dialogue.

Since we've launched our "Plan B" campaign for Motorola, the company has only implemented one of our previously suggested actions: hiring a new head for the Mobile Devices Business (someone who we were not satisfied with).

What are the consequences of this board and corporate inaction to shareholder concerns?

From July 9th through today, Motorola's stock price has dropped 8.13%. Think it's a general market swoon? Think again. The S&P has dropped by 4.5%. And Nokia? Well, they had a blowout quarter, taking advantage of Motorola's weakness globally. Nokia's stock is up over 3% since July 9th.

Since the May Stockholder's Meeting, the attitude from the Board and Senior Leadership Team towards shareholders' legitimate questions has suggested: "The status quo is fine. We're figuring things out. Let them eat cake."

We're here to say that the status quo is not acceptable. We're not willing to sit back and watch this company underperform the market for another month. Enough is enough. It's time to storm the Bastille of Schaumburg.

I've spoken with a large majority of Motorola's top ten institutional holders since we went public with our campaign. Most are sympathetic to our calls for change. Whether they formally join up with us or not, no Motorola shareholder can be happy with the current state of this great American institution.

One representative from a very large holder of Motorola's stock told me:

"It will be very interesting to see how they respond to the points of your plan. They're obviously well thought-out and seem to make sense. If they just meet with you to be able to say they met with you, that will say something. In these situations, it's not just what the Board and Company say to a critic, it's how they respond. That will be very telling."

Indeed. To this point, we haven't even received the courtesy of a going-through-the-motions meeting so that they can say they've met with us and heard our points (and respectfully disagree).

I'm not happy with this non-response - and no other Motorola shareholder should be. If a shareholder cannot raise serious and credible concerns about the way a company is being run after a lengthy and painful downturn, when is the right time? Are we only supposed to speak up at the Annual Meeting and then bite our tongues for 12 months? Are we supposed to be patient and trust in the Board and Management with blind faith?

I love this company - and I know most of our supporters do too. One Motorola employee supporting our group said it best a few weeks ago in a comment on the draft plan:

"Dissent is the highest form of patriotism."

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