NEW YORK — The corporate board meetings described in Carl Icahn's stories are never quite like those of traditional business lore.
In Icahn's tales, company directors like the lights low so catnaps pass unnoticed. They spend a lot of time ruminating on their golf scores, reading newspapers or eagerly anticipating lunch and the distribution of paychecks.
Icahn told recently of a meeting at which a corporate president proposed to buy a garbage-disposal manufacturer that was losing $40 million a year in head-on competition with General Electric Co. The proposal didn't draw a murmur from the board members, Icahn says, until he denounced it as possibly the worst deal in history and one that would open the directors to shareholder suits.
"When they heard 'personal liability,' four guys put down their newspapers," Icahn recalled at a New York seminar. "They found that at least a little interesting."
Potshots at corporate management are among the favorite pastimes of the gangling New York financier who has gained prominence with a six-year string of corporate takeover bids. Since 1979, 16 takeover plays and securities investments have earned Icahn & Co. more than $166 million, including $40 million earned earlier this year in his bid for Phillips Petroleum Co.
Today Icahn, 49, is embroiled in a struggle for Trans World Airlines that has carried him to distant courtrooms and the marbled halls of Congress. Some believe that in the future he may pursue even larger targets.
If his successes have won him a place in the pantheon of corporate raiders, Icahn naturally has also encountered his share of adversity. Managements have accused him of racketeering, securities law violations and, in TWA's recent phrase, "corporate piracy."
His takeover threats have set off protests from employees and their neighbors.
When Icahn threatened Dan River Inc. in 1982, company sympathizers living near the textile firm's Danville, Va., headquarters bought thousands of shares to fight him off in a battle that ended in a leveraged buy-out. This spring, Phillips' employees demonstrated their unhappiness with Icahn's bid by dousing company proxies in Phillips motor oil and lighting a bonfire.
Icahn shrugs off such criticism with the kind of response that has become reflexive among corporate raiders. "We've got an overprivileged corporate aristocracy in this country, and shaking it up can only help the economy," he said. "If you want to be loved in this business, buy a dog."
His basic tactics aren't complicated. He finds companies that are undervalued by the stock market and buys stock with the aim of "attempting to control their destinies," as he wrote in one memo describing his investment philosophy.
He may seek to gain control through a proxy fight or tender offer, force management to liquidate or sell out to another firm (a "white knight") or resell his stock to the company at an above-market price ("greenmail").
The trick lies in picking the right companies and scaring or forcing their managements to take the desired steps.
Wall Street takeover specialists say his ability to spot targets is a key strength for Icahn, who spends long hours in his 6th Avenue offices poring over the small print in corporate reports. Icahn is a self-described loner who delegates little responsibility, but he is aided in this task by the firm's senior vice president, Alfred D. Kingsley.
"The man reads a balance sheet like Horowitz plays the piano," Icahn said.
Icahn has also cultivated a skill at scaring the opposition. He terrifies because his track record is so far unmarred by a single major loss, and because of pressure tactics. Among them is his habit of accumulating more and more shares during a takeover fight.
His rambling anti-management tirades are themselves a tactic, say some who have faced him, designed to convince adversaries that he is a desperate man who must be appeased.
"I don't think Carl's a genius; he's just willing to be a bigger pain . . . than the people he takes on," said a takeover specialist who has seen Icahn in action. "He bullies and they cower."
Managements are often rattled to find themselves in a game in which a single misstep can cost them their companies and their jobs. "It's like playing golf for $1,000 a hole," said J. R. Topper, chief executive of Anchor Hocking Corp., a Lancaster, Ohio, manufacturer that repurchased Icahn stock at a $3-million premium in 1982. "Even people who can afford it feel uneasy."
Another Icahn hallmark is that he keeps changing his negotiating position, something that adversaries find exasperating. "They may find him hard to deal with, but from Carl's standpoint, it's a great negotiating tool," said fellow raider Irwin L. Jacobs, who counts himself among Icahn's admirers.