Shares of Xerox (XRX) are in focus in morning trading after the company announced the resignation of a director due to a difference of opinion with the board and the receipt of director nominations from activist investor Carl Icahn. WHAT’S NEW: Xerox announced this morning that Jonathan Christodoro, former managing director of Icahn Capital, resigned from the board of directors in order to allow Carl Icahn and affiliated funds to submit director nominations for the 2018 annual meeting of shareholders, ending a standstill arrangement between Xerox and the Icahn Group agreed on in June 2016. In a December 8 letter to board chairman Robert Keegan, Christodoro wrote, “I have appreciated my time on the board but feel I can better serve the interests of Xerox and our shareholders by resigning and joining a slate of three other nominees who will be seeking election to the board at Xerox’s 2018 annual meeting of shareholders.” He added that “As you know, the board has been addressing issues I consider vital to Xerox’s current and future wellbeing. Until the last few weeks, it appeared that the board’s decisions would be consistent with my views on the best interests of Xerox and our shareholders. It now appears, however, that the board will make decisions and take Xerox in a direction with which I strongly disagree.” Christodoro said in the letter that he is one of the four Icahn nominees along with Keith Cozza, Jay Firestone and Randolph Read. Icahn Associates held a 9.7% stake in Xerox as of September. COMPANY COMMENTS: Xerox commented that “In 2017 alone, we expect to meet or exceed our target of $600M of gross cost savings, a critical step as we continue our journey to improving our revenue trajectory…The board and management team are focused on enhancing shareholder value and will continue to take the necessary actions to achieve this objective.” The company added that shareholders are not required to take any action at this time, the 2018 meeting has yet to be scheduled and the Corporate Governance Committee will review the Icahn Group’s director candidates and make a formal recommendation in a definitive proxy statement. REAFFIRMED GUIDANCE: Xerox reaffirmed its full year guidance for adjusted operating margin, earnings per share, cash flow and revenue provided with its third quarter earnings results. On October 26, Xerox said it expects fiscal year 2017 adjusted EPS to be in the range of $3.28-$3.44, which compares to analyst estimates of $3.39. The company also expects FY17 operating cash flow to be negative $50M to $150M. PRICE ACTION: Xerox was up 0.4%, or 12c, to $29.70 in morning trading.
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