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Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On April 8, 2019, Michael Nevin notified Conduent Incorporated (the “Company”) that he was resigning from the Board of Directors of the Company effective immediately. As previously disclosed, Mr. Nevin was a director designated by Carl C. Ichan and certain other parties pursuant to the letter agreement (the “Icahn Agreement”), dated as of January 28, 2016, entered into by Xerox Corporation, our former parent company, with Icahn Partners Master Fund LP, Icahn Partners LP, Icahn Onshore LP, Icahn Offshore LP, Icahn Capital LP, IPH GP LLC, Icahn Enterprises Holdings L.P., Icahn Enterprises G.P. Inc., Beckton Corp., High River Limited Partnership, Hopper Investments LLC, Barberry Corp., Jonathan Christodoro and Carl C. Icahn (collectively, the “Icahn Group”). On December 31, 2016, the Company entered into a Joinder Agreement to the Icahn Agreement. Pursuant to the Icahn Agreement, on April 11, 2019, the Icahn Group designated Jesse Lynn, General Counsel of Icahn Enterprises, L.P., as a replacement for Mr. Nevin, which designation is subject to the Company’s approval, not to be unreasonably withheld, conditioned or delayed.
Prior to his resignation, Mr. Nevin was a member of the Corporate Governance Committee and the Compensation Committee.
Mr. Nevin furnished the Company with the letter attached as Exhibit 17.1 to this Form 8-K in connection with his resignation.
In response to Mr. Nevin’s resignation letter, the members of the Company’s Board of Directors that are not affiliated with Carl Icahn or Darwin Deason issued the following statement:
“We are highly engaged and fully focused on taking actions that are in the best interest of the Company and all of its shareholders. Since Conduent’s inception as a public company 28 months ago in January 2017, our Chairman, William G. Parrett, along with the entire Board, has guided the execution of the Company’s three-year transformation program.
Under the Board’s oversight, the Company is focused on expanding margins, executing investments into the business to modernize enterprise applications and technology stack, improving client engagement and delivering quality services, in order to enhance its position for future value creation. Over the last 28 months since becoming a publicly-traded company, the Company has achieved a number of milestones, including key divestitures, completing a $730 million cost saving program, paying off almost $500 million of the Company’s 10.5% Senior Notes and the settlement of litigation with the State of Texas that was inherited at the time of Conduent’s spin-off from Xerox Corporation.
We note that seven out of the nine members of the Board, including Mr. Nevin, have served as directors since the Company’s founding. During that time, virtually every decision by the Board and its Committees has been unanimously approved.
We believe Mr. Nevin’s resignation letter mischaracterizes many of the events he describes in his letter, and we strongly disagree with its assertions. In discussions between Mr. Parrett and Mr. Icahn from Sunday, April 7, 2019, through Monday, April 8, 2019, Mr. Icahn indicated he could cause Mr. Nevin’s resignation letter not to be delivered to the Board and released publicly if Mr. Parrett agreed to immediately resign as Chairman so that a director designated by Mr. Icahn could replace Mr. Parrett as Chairman. Mr. Icahn also expressed his desire that Mr. Parrett resign from the Board and that a new director chosen by Mr. Icahn be added to the Board. We believe Mr. Nevin’s “noisy resignation” and these related discussions represent an attempt to take control of the Company’s Board.”
The Icahn Agreement, which includes customary standstill provisions, remains in effect. In accordance with the agreement, Carl Icahn and his affiliates are prohibited from running or supporting a proxy contest at the Company’s 2019 Annual Meeting of Shareholders and are required to support all directors nominated by the Company.
The Company furnished Mr. Nevin with a copy of this Current Report on Form 8-K on April 11, 2019, providing him with the opportunity to furnish the Company with a letter addressed to the Company stating whether he agrees with the statements made by the Company herein and, if not, stating the respects in which he does not agree. The Company will file any letter received by it from Mr. Nevin as an exhibit by an amendment to this Form 8-K within two business days after receipt.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
