Corporate repower
Following switch to SCR, Navistar investors shake up board and see retirement of industry veteran James Hebe

By Charlie Morasch,Land Line contributing writer

Tooele, UT – Racing motorcycles zip around tight curves here, and owners of new Cobra Mustangs can take a course on learning to drive their street-legal sports coupes loaded with ungodly horsepower.

It’s on the property’s off-road trails where a trucking giant hopes to regain its advantage after a tumultuous few years.

For each of the past three years, Navistar has brought hundreds of salespeople and managers to the Miller Motorsports Park track facility in Tooele, UT, built by Utah Jazz owner Larry Miller. 

Truck sales employees drove 50 trucks made both by Navistar and its competitors on paved paths as part of the company’s “boot camp,” a name befitting both the area’s tough terrain and the bigger picture of Navistar preparing to fight its way back.

If any company has been battle tested, it’s Navistar.

During the past three years of the company’s 175-year history, Navistar employees and dealers have had to defend International’s go-it-alone EGR emissions approach as the rest of the industry added urea-based SCR after-treatment. When it became clear in late 2011 that emissions credits would run out, they awaited word from the top and legal rulings after the company sued the Environmental Protection Agency.

Rumors of a possible bankruptcy/merger/takeover persisted. Even after CEO Daniel Ustian was ousted in August, headlines continued to echo criticisms of activist shareholder Carl Icahn, who owns a reported 15 percent of Navistar’s stock. In mid-September Icahn called for more control of the board of directors as he and former business associate Mark Rachesky of MHR Fund Management each increased their shares in the company.

Inside a banquet-size room at the Utah race track, Jim Hebe, then-Navistar senior vice president of North American sales operations, spoke at a combined informational session and pep rally for International dealers.

“We’re still going to go through the next few months of Rachesky and Icahn trying to decide who is going to be the dominant force on our board,” Hebe said.

“Who gives a shit,” Hebe told a gathering of International dealers and trucking media. “At the end of the day, who cares who sits on our board of directors? It sure as shit didn’t make any difference for the last three years. Why would it make any difference going forward?”

Less than two weeks after the boot camp, Navistar announced Hebe’s retirement.

In early October, Navistar announced it is appointing two new members to its board of directors, and as part of a settlement will later add a third director approved by Icahn and Rachesky.

Vincent Intrieri, who has worked for Icahn since 1998, and Rachesky himself were appointed to the Navistar board. Intrieri and Rachesky will replace Eugenio Clariond and Steven Klinger, who Navistar said have agreed to retire. A third board member also will be replaced.

“I am glad to have reached an agreement that provides strong shareholder representation on the board and look forward to working diligently with the board to enhance value at Navistar,” Icahn said, according to a Navistar news release.

Rachesky said he looked forward to “working closely with management and other members of the board of directors of Navistar to effect the changes necessary to drive value for all shareholders.”

The settlement between Navistar, Icahn and MHR means Icahn and MHR have agreed to not run a proxy contest at the 2013 shareholder meeting and will support the board’s nominees. Proxy contests can lead to management shakeups and have been associated with hostile takeovers.

Within nine months, Navistar has changed its after-treatment exhaust systems, replaced nearly a third of its board of directors, and moved into a new headquarters. Only time will tell whether changes have just begun at America’s oldest truck making company. LL

March/April
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