ITT raises stakes for Hilton
Associated PressLAS VEGAS -- ITT Corp. has proposed a $165 million severance plan to protect 650 executives and employees if a hostile takeover bid by Hilton Hotels Corp. is successful. ITT spokesman Jim Gallagher called the figure a "worst-case scenario" that would be implemented only if Hilton succeeds in its $8.3 billion bid and fires the employees.
Hilton has said the takeover would save $100 million, "which means you're going to fire a lot of people," Gallagher said.
The proposal was included in a regulatory filing with the Securities and Exchange Commission on Tuesday. The filing did not outline how the money would be divided.
A Hilton executive said ITT is forgetting about its shareholders.
"What ITT is doing is to further entrench management in their jobs and feather their own nests in detriment of the shareholders' interest," said Marc Grossman, Hilton senior vice president.
The filing also indicated that ITT's hotel and casino business, which includes the Sheraton and Caesars World chains, will take the ITT Corp. name after the completion of its planned three-way split.
When the split was announced last month, ITT said the hotel business would be called ITT Destinations Inc., while its telephone directory business would be called ITT Corp.
The directory business instead will be called Information Services Inc. The business comprising ITT's technical schools will be called Educational Services Inc.
The filing said the new ITT's board of directors will have staggered terms, unlike the current board, which faces shareholder confirmation at each annual meeting. Such a provision would make a hostile takeover more difficult.
Each of the 11 directors would serve three years, with the first four being elected in November. Hilton has nominated its own slate of directors for ITT, which usually holds its annual meeting in May. ITT delayed this year's meeting, saying it wanted to give shareholders more time to decide on Hilton's offer. But the breakup is to occur before the meeting, which must be held by November.
Hilton is trying to block the spinoff. A federal judge is scheduled to hear arguments on Sept. 29. Hilton last month raised its takeover bid by 27 percent to $70 a share after ITT announced the split-up plan.
