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Ex-Conduent Board Member: Icahn Takeover Claim ‘Unequivocally False’

Conduent had previously said a ‘noisy resignation’ letter from a disgruntled board member was part of a board takeover attempt by Carl Icahn that was aimed at replacing current chairman William Parrett.

Ex-Conduent board member Michael Nevin is firing back at the company after it said his resignation letter was part of an attempt by activist investor Carl Icahn to take over Conduent’s board of directors.

In a letter filed Tuesday afternoon with the SEC titled “setting the record straight,” Nevin said his resignation was a response to the leadership of board chairman Bill Parrett, and nothing else.

“I was fed up with being misled by the Chairman of the Board and tired of the lax governance practices that I observed during my tenure on the board — pure and simple,” Nevin wrote in a letter filed yesterday with the SEC. “Any suggestion by Conduent that my resignation was somehow an attempt by my employer, Carl Icahn, to take control of the company’s board is unequivocally false.”

Nevin resigned last week and penned a blistering letter that attacked Parrett’s leadership and the company’s CEO, blaming both for Conduent’s falling value. In response Conduent said that Icahn offered to keep Nevin’s letter from going public if Parrett resigned as chairman of the board, and allowed Icahn to appoint a successor. Conduent said that discussion took place between April 7 and April 8.

However, in a letter filed Tuesday, Nevin said that was never part of the conversation between the two men.

“Mr. Icahn told Chairman Parrett that he believed Parrett and CEO Ashok Vemuri were directly responsible for the 40% decline in Conduent’s stock price since last September for many of the same reasons mentioned in my resignation letter,” Nevin wrote.

He said Icahn was also concerned that Conduent management wanted to eliminate a matching 401(k) program for its thousands of employees, and force the board to take a vote on it, in order to report the savings during its next quarterly earnings.

“Mr. Icahn expressed his belief (which I share) that the 401(k) proposal was nothing more than an attempt to artificially manage earnings so that they would exceed the consensus estimates for the quarter and thus keep the stock from tumbling,” Nevin wrote. “Mr. Icahn also told Chairman Parrett in no uncertain terms that he believed Parrett’s gross negligence in his handling of the 401(k) vote could well bring on personal liability as well as issues for the company as a result of inaccurate disclosures concerning these items.”

[RELATED: What You Need to Know About Carl Icahn’s Attempted Board ‘Takeover’ Of Conduent]

Nevin described the phone call between Ichan and Parrett as “heated” and involved discussions about a $2 billion lawsuit brought against the company by the state of Texas, as well as the company’s waning revenue and its loss of 44 percent of its value since September. Conduent’s stock has dropped 32.99 percent over the last 12 months, settling at $13.12 per share on Tuesday.

Nevin said at one point Parrett offered terms under which he would step down from the board. According to Nevin, Parrett broached the issue with Conduent board member Courtney Mather – also a Carl Icahn employee.

“Mr. Icahn went on in the heated discussion to state his view that Parrett should resign because he was hurting, rather than helping, the company,” Nevin wrote. “Subsequent to this conversation, Chairman Parrett called Mr. Mather and proposed that, if I were to withdraw my resignation, Parrett would support the candidate preferred by Mr. Icahn’s board designees for hiring as the company’s new Chief Operations Officer, who he suggested might ultimately replace Ashok as CEO at some time in the future. This offer was turned down because of a lack of trust in any more of Parrett’s promises.”

In the same 8-K filing that contains Nevin’s letter, Florham Park, N.J.-based Conduent said it stands by what it said previously about Icahn and the letter, and said Nevin’s description in his response “mischaracterize” the events.

“The members of the Company’s Board of Directors that are not affiliated with Carl Icahn or Darwin Deason continue to believe that the statement made by such directors in the Initial Form 8-K is accurate, and believe the additional statements in the Response Letter mischaracterize the events described therein,” the filing states. “The Company has no further comment on the Response Letter at this juncture.”

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