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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
(AMENDMENT NO. 9)
SOLICITATION/RECOMMENDATION STATEMENT
Pursuant to Section 14(d)(4)
of the Securities Exchange Act of 1934
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ITT CORPORATION
(Name of Subject Company)
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ITT CORPORATION
(Name of Person(s) Filing Statement)
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COMMON STOCK, NO PAR VALUE
(INCLUDING THE ASSOCIATED SERIES A PARTICIPATING CUMULATIVE PREFERRED STOCK
PURCHASE RIGHTS)
(Title of Class of Securities)
450912 10 0
(CUSIP Number of Class of Securities)
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RICHARD S. WARD, ESQ.
EXECUTIVE VICE PRESIDENT,
GENERAL COUNSEL AND CORPORATE SECRETARY
ITT CORPORATION
1330 AVENUE OF THE AMERICAS
NEW YORK, NY 10019-5490
(212) 258-1000
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of the Person(s) Filing Statement)
WITH A COPY TO:
PHILIP A. GELSTON, Esq.
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019-7475
(212) 474-1000
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INTRODUCTION
The Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") originally filed on February 12, 1997, by ITT Corporation, a
Nevada corporation (the "Company"), relates to an offer by HLT Corporation, a
Delaware corporation ("HLT") and a wholly owned subsidiary of Hilton Hotels
Corporation, a Delaware corporation ("Hilton"), to purchase 61,145,475 shares of
the common stock, no par value (including the associated Series A Participating
Cumulative Preferred Stock Purchase Rights), of the Company. All capitalized
terms used herein without definition have the respective meanings set forth in
the Schedule 14D-9.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
The response to Item 8 is hereby amended by adding the following after
the final paragraph of Item 8:
On April 21, 1997, the Honorable Philip M. Pro issued an order denying
the Hilton Annual Meeting Motion, pursuant to which Hilton sought to require the
Company to hold its annual meeting in May 1997. A copy of the order is filed as
Exhibit 53 hereto and is incorporated herein by reference.
ITEM 9. EXHIBITS.
The response to Item 9 is hereby amended by adding the following new
exhibit:
53. Order of the Honorable Philip M. Pro dated April 21, 1997.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Statement is true, complete and correct.
ITT CORPORATION
By /s/ RICHARD S. WARD
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Name: Richard S. Ward
Title: Executive Vice President,
General Counsel and
Corporate Secretary
Dated as of April 22, 1997
2
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EXHIBIT INDEX
Exhibit Description Page No.
- ------- ----------- --------
(53) Order of the Honorable Philip M. Pro dated April 21, 1997.
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[Exhibit 53]
UNITED STATES DISTRICT COURT
DISTRICT OF NEVADA
* * *
HILTON HOTELS CORPORATION and)
HLT CORPORATION, )
) CV-S-97-095-PMP (RLH)
Plaintiffs, )
v. )
)
ITT CORPORATION, ) O R D E R
) RE PRELIMINARY INJUNCTION
Defendant. )
)
Before the Court for consideration is the Motion of Plaintiffs Hilton
Hotels Corporation and HLT Corporation ("Hilton") for a Preliminary Injunction
(#34) requiring Defendant ITT Corporation to conduct its annual meeting in May
1997. Hilton's Motion seeks mandatory preliminary relief. It is, therefore,
subject to heightened scrutiny and the injunction requested should not issue
unless the facts and the law clearly favor Hilton. DAHL V. HEM PHARMACEUTICAL,
7 F.3d 1399, 1403 (9th Cir. 1993), and ANDERSON V. U.S., 612 F.2d 1112, 1114
(9th Cir. 1979). For the reasons set forth below, the Court finds that Hilton
has not satisfied this burden and that its Motion for Preliminary Injunction
must, therefore, be denied.
First, neither Nevada law nor ITT's bylaws require that the 1997 annual
meeting be conducted in May.
Pursuant to NRS 78.330, annual meetings are held by Nevada corporations to
enable shareholders to elect directors and to conduct other business of the
corporation. However, Hilton misapprehends the term "annual meeting" as used in
the Nevada Revised Statutes and ITT's bylaws as requiring that such a meeting be
conducted every twelve months. If that were the intent of the Nevada
Legislature or ITT, they could have easily and clearly said so in the governing
statutes and bylaws. Indeed, an annual meeting every twelve months is precisely
what was provided for by the corporate bylaws at issue in the seminal case
relied upon by Hilton for the proposition that an annual meeting is required
every twelve months for Nevada corporations. NEVADA EX. REL. CURTIS V.
MCCULLOUGH, 3 Nev. 202 (1867). SEE ALSO E.R. HOLDINGS V. NORTON CO., 735
F. Supp. 1094, 1097 (D. Mass. 1990). Instead, Section 1.2 of ITT's bylaws
conforms to NRS
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2
78.330(l) and provides that ITT's annual meeting shall be held at such date,
time and place as determined by the Board of Directors.
The Court finds persuasive the Affidavit of Professor John C. Coffee, Jr.,
that the term "annual meeting" at issue must be understood as an adjective
which "distinguishes the REGULAR meeting for the election of directors for
other SPECIAL meetings called by the board for the stockholders.'' See Coffee
Affidavit, paragraph 32 appended to ITT's Memorandum in Opposition (#62). The
Court's conclusion is reinforced by the provisions of NRS 78.345(1) which
provide:
If any corporation fails to elect directors within 18 months after the last
election of directors required by NRS 78.330, the district court has
jurisdiction in equity, upon application of any one or more stockholders
holding stock entitling them to exercise at least 15 percent of the voting
power, to order the election of directors in the manner required by NRS
78.330.
Hilton has offered, and the Court can divine no reason why the Nevada
Legislature would postpone for six months a shareholder's remedy for a
corporation's failure to hold an annual meeting which the Legislature intended
to be held within twelve months of the prior annual meeting. The Court
concludes that, subject to the right of a board of directors to specify a
shorter period, annual meetings for Nevada corporations are contemplated to
occur no later than eighteen months after the last such meeting. SEE OCILLA
INDUS. V. KATZ, 677 F. Supp. 1291, 1301 (E.D.N.Y., 1987).
Hilton alternatively argues that even if consistent with Nevada law and
ITT's bylaws, failure to conduct an annual meeting in May 1997 would constitute
a breach of the fiduciary duty owed by ITT's incumbent Board of Directors to its
shareholders.
Courts have consistently prevented actions by an incumbent board of
directors which were primarily designed to impair or impede the shareholder
franchise. In a recent case recognizing the importance of the shareholder vote,
but arising from a substantially different factual context than is presented
here, Judge Edward C. Reed, Jr., reiterated that shareholders of a corporation
generally have, "'only two protections against perceived inadequate business
performance. They may sell their stock. . ., or they may vote to replace
incumbent board members.' Thus, interference with shareholder voting is an
especially serious matter, not to be left to the directors' business judgment,
precisely because it undercuts a primary justification for allowing directors to
rely on their judgment in almost every other context." SHOEN V. AMERICO, 885
F. Supp. 1332, 1340 (D. Nev. 1994), VACATED BY STIP., (D. Nev. 1995) (Citation
omitted).
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This Court fully embraces the foregoing principles expressed in SHOEN.
However, given the saliently different facts presented in this case, Hilton's
reliance on SHOEN is misplaced. SHOEN, among other things, involved a
situation in which the incumbent board of directors of Americo advanced an
already noticed annual meeting date by two months for the primary purpose of
re-electing the incumbent board before an arbitration decision was issued which
might render the incumbent board unable to control dissident shareholder shares
for voting purposes, and before Paul Shoen, a dissident shareholder, had the
opportunity to campaign for a seat on the board and seek amendment to the
bylaws. Relying principally on BLASIUS INDUS. V. ATLAS CORP., 564 A.2d 651
(Del. Ch. 1988), the SHOEN Court found that the incumbent board demonstrated no
compelling justification for its actions and had thus breached its fiduciary
duty to Americo's shareholders.
The circumstances presented here are far different from those in SHOEN or
BLASIUS, but are not unlike those confronted in STAHL V. APPLE BANCORP CORP.
579 A.2d 1115 (Del. Ch. 1990). Here, as in STAHL, a majority shareholder
claims the incumbent Board of Directors has delayed its annual meeting to
frustrate a proxy contest and public tender offer. Moreover, in STAHL, the
incumbent board had set and then rescinded the record date for the annual
meeting, although no specific date for the annual meeting had been scheduled.
STAHL, 579 A.2d at 1118. The STAHL court concluded that, "the action of
deferring this company's annual meeting where no meeting date has yet been set
and no proxies even solicited does not impair or impede the effective exercise
of the franchise to any extent." ID. at 1123. The Court's reasoning in STAHL
is fully applicable to the instant case.
ITT has not yet set its annual meeting, nor is it required by Nevada law or
its bylaws to conduct that meeting in May 1997. The failure to hold an annual
meeting in May, which has not even been set and is not yet required to be set,
cannot be viewed as an inequitable manipulation by the incumbent Board primarily
designed to impede the exercise of the shareholder franchise. Further, in
accord with NRS 78.138 and relevant case authority, ITT's Board of Directors
retains reasonable discretion in setting an annual meeting to resist hostile
takeover offers. SHOEN, 885 F. Supp. at 1341, n.22, and STAHL, 579 A.2d at
1124.
This Court adopts the view expressed by Chancellor Allen, who authored the
decisions in STAHL and BLASIUS that, "inquiries concerning fiduciary duties are
inherently particularized and contextual. It is probably not possible to work
out rules that will be
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4
perfectly predictive of future cases involving claimed impediments to the
shareholder vote. It is sufficient to express a reasoned judgment on the facts
presented." STAHL, 579 A.2d at 1125. On the facts presented in this case, the
Court finds that Hilton has failed to demonstrate that ITT has breached its
fiduciary duty to shareholders by failing to schedule an annual meeting for May
1997.
Finally, at the hearing on Hilton's Motion for Preliminary Injunction
conducted April 17, 1997, the Court permitted counsel for the Plaintiff
Shareholder Class in a related action, COLLINS V. ANDERSON, Case
No. CV-S-97-104-PMP (RLH), to present oral argument in support of the mandatory
relief requested by Hilton. In that argument, the Shareholder Class emphasized
the importance of protecting the voting rights of ITT's shareholders from
inappropriate interference by ITT's Board of Directors. As stated earlier,
however, there is no impairment of the shareholder franchise in this case
because no annual meeting of shareholders has yet been set and the time for
conducting the annual meeting has not yet expired.
Neither is this Court, as suggested by the Shareholder Class, deciding when
ITT's 1997 annual meeting should be held. That is a matter for determination
by the Board of ITT within the parameters set by Nevada law and ITT's bylaws.
Lastly, the argument of the Shareholder Class that a delay of the annual
meeting beyond May 1997 may cause Hilton to withdraw its tender offer is simply
not determinative as to whether the mandatory relief requested should issue.
Hilton, ITT and ITT's shareholders are, within the limits of the law, permitted
to do as they deem advisable in the marketplace with respect to their investment
and business decisions.
IT IS THEREFORE ORDERED that Hilton's Motion for Preliminary Injunction
(#34) is denied.
DATED: April 21, 1997
/s/ PHILIP M. PRO
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PHILIP M. PRO
United States District Judge
