Escape from Icahn: The Road to Delaware

BusinessWeek recently reported that Lions Gate Entertainment Corp. is seriously considering relocating to the United States in the face of Carl Icahn’s attempts to increase his stake in the company.  Icahn is a well-known “shareholder activist” and apparently strikes such fear in the hearts of the board of directors that it is worth considering corporate relocation, even though the company is well aware it would likely face major financial penalties for such a move. 
 
Ironically, it is Icahn who has been using (or at least trying to use) corporate relocation to his advantage.  Icahn recently relocated the company American Railcar, Inc., from Missouri to North Dakota to take advantage of the state’s shareholder-friendly corporate law option, and has tried (unsuccessfully) to get other companies, Like Amylin Pharmaceuticals Inc. and Biogen Idec Inc. to follow suit. 
 
Perhaps I am more of a shareholder activist than I originally thought, but the idea of the board moving the company to avoid Icahn’s advances seems wrong to me. Not necessarily illegal, just wrong. Shareholders do, after all, get a vote on relocations like this, so shareholders can always object to the move if they disagree with the board.
 
A shareholder move seeking a greater voice in corporate governance seems proper to me because it is about the exercise of ownership rights.  A costly move initiated by the board to avoid a particular shareholder’s influence seems wasteful and more about self-preservation at shareholders’ expense than about good business judgment.  To me, this is one place where what is good for the goose, is not good for the gander. 
 
--Josh Fershee