10 Questions for Carl Icahn

By Barbara Kiviat

It has been a busy few weeks for Carl Icahn, the billionaire financier who gained fame--some would say notoriety--in the 1980s by taking over TWA and agitating for change at the likes of Texaco and RJR Nabisco. While juggling his bids to get on the board of mobile-phone manufacturer Motorola and to buy car-parts maker Lear, Icahn, 71, took a break to talk with TIME's Barbara Kiviat about imperial CEOs, movies by mail and the one thing no one ever gets about him.

In the 1980s, you were called a corporate raider. Now you're a shareholder activist. Why do people think about you differently?

The bloom is off the rose concerning the imperial CEO. Finally shareholders are becoming incensed by these reprehensible bonuses and severance packages. The average CEO makes 350 to 400 times what the average worker does.

You make quite a lot of money. Isn't complaining hypocritical?

I'm not against a CEO making a lot of money if the stock goes up and he has options. What's unconscionable is when the stock goes down and they reprice the options. They say, The stock was at $25, and we wanted to incentivize you, so we gave you options at $25. Now it's at $15, so--you know what?--we'll reprice the options at $15. CEOs are paid for doing a terrible job. If the system wasn't so messed up, guys like me wouldn't make this kind of money.

Do you accomplish anything besides making money?

Yes. America is going to lose its economic hegemony if we don't do something along the lines of what I'm doing, where you make managements accountable. Our companies are really not competitive with Asia, and this is the great new threat.

You're trying to get on the board of Motorola, which you think has too much cash on its books. Does CEO Edward Zander need to go?

I'm not looking to remove Motorola's board. I'm only saying that there's no reason for that company to be sitting with $12 billion of cash that would be better used by shareholders.

Why are you buying car-parts maker Lear? I thought the American auto industry was dying.

When most investors, including the pros, all agree on something, they're usually wrong. The number of cars being bought, with Asia coming on so strongly, will increase substantially over the next decade.

You're the largest shareholder and a director of Blockbuster, which has been battered by mail-order and digital competition. What's the plan?

In the online battle with Netflix, our stores have become one of our greatest assets. We tell the consumer, Subscribe to Blockbuster online because if you don't feel like waiting for the mail, you can run down to the store with your old movie, and we'll give you a new one for free. We're up to 2.2 million subscribers.

A lot of people have lost jobs soon after you became involved with their company. What would you say to them?

Most of the companies I become involved with are not performing well and are already cutting jobs. I might accelerate the process, but it's top management that has allowed a great deal of waste and redundancy to occur at the expense of shareholders and is now having to do something about it.

Last year you pushed for big change at TIME's parent, Time Warner--breaking up the company, ousting CEO Dick Parsons--but none of that happened.

Dick Parsons agreed to do what we wanted most--a $20 billion buyback of the stock. He did what he promised, and the stock is up 30%. That helps all shareholders. Our fund made $250 million. It's a nice way to lose.

What don't people understand about you?

I know some won't believe this, but I'm really a nice guy. I get along with many of these CEOs behind the scenes. We have dinner. Not Christmas dinner--but a lot of them, while they may not admit it, agree with me.

You just turned 71. Is retirement on the horizon?

Well, a number of CEOs have offered to host my retirement party. But I'm just a competitive guy that grew up in Queens. I can't see myself spending the rest of my life in Florida playing golf.