Xerox Executives Stay Put as Settlement With Carl Icahn Expires

Posted May 4, 2018 2:15 p.m. EDT

The leaders of Xerox, who looked to be on their way out just two days ago, may not be going anywhere just yet.

The embattled office equipment company said late Thursday that a settlement it reached earlier this week with unhappy shareholders would not go into effect because a key deadline had been missed. That settlement had called for the replacement of Jeff Jacobson, the company’s chief executive, and a majority of its board of directors.

Instead, Xerox said, Jacobson and the current board will remain in place — though it acknowledged that the abrupt shift would probably raise many questions.

“Xerox and its board of directors recognize the uncertainty caused by the developments of the past several days among the company’s investors and other stakeholders,” it said in a news release.

The departures-that-never-were cap a turbulent five months for Xerox. The company, which is credited with transforming the 20th century office, has long battled disappointing results and a sluggish stock price amid the rise of computerization, email and the cloud. In January it reached a deal to cede control of its operations to Fujifilm of Japan, which has long been its partner in an international joint venture.

But the deal drew criticism from major shareholders, including Carl Icahn, the hedge fund manager and shareholder activist, and Darwin Deason, who became a major Xerox investor after selling his company to it. They said the pact undervalued Xerox. In a lawsuit aimed at stopping the deal, Deason accused Jacobson of striking the accord to keep a job at the combined company.

Last week, a court in New York state sided with Icahn and Deason and temporarily blocked the Fujifilm deal.

On Tuesday, Xerox said it had struck an agreement with the two investors that included the resignation of Jacobson and a majority of the board. Allies of Icahn were set to take the top positions at the company. The settlement also called for Xerox to cancel or renegotiate the Fujifilm deal.

But Xerox said Tuesday that the agreement was contingent on Deason’s ending his litigation against the company. Two days later, Xerox said the deal had expired Thursday night “in the absence of such stipulations.”

It was not immediately clear what led the deadline to pass without the settlement’s kicking in. In a news release Friday, Icahn and Deason placed the blame on the company and said they would continue to challenge its management. Xerox board members “were once again intentionally violating their fiduciary duties to Xerox shareholders by pursuing their own brazen self-interest,” they said in a news release.

They added, “The Xerox board recklessly refused to follow through with the leadership and governance changes we agreed to, demanding unprecedented additional approvals for their own personal self-interest.”