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Former executives recall Icahn takeovers

One of activist investor Carl Icahn's most famous takeovers was that of Trans World Airlines in 1985.
by Adam Wilmoth Published: June 3, 2012

Editor's note: This story was written from unpublished interviews from 2006.

Sipping coffee at a small restaurant in a Kansas City hotel, Richard Pearson reflected on how his life and the thousands of employees at Trans World Airlines were affected by New York investor Carl Icahn's 1985 takeover.

The draining process cost thousands of employees their jobs and left the former TWA president less emotional about life.

“It's a tough time, and everyone is changed by the process,” Pearson said. “I was greatly disappointed with not being able to stay with TWA and see it work. That's probably folly, but it feels like falling off the horse and not being able to get back on.”

Pearson said his first meeting with the company's largest shareholder was somewhat confrontational.

The two met face-to-face for the first time a few days after Icahn gained control. The famed corporate raider began the conversation saying he wouldn't make Pearson any commitments. The TWA president responded that he didn't know whether he'd stay with the airline.

“It was probably like any time you meet anybody who is seen as a threat to whatever it is you're doing,” Pearson said. “His big attack at the time was that the executives were fat-cat, country-club guys who didn't work hard and didn't really represent the shareholders. That puts you on the defensive immediately.”

But the relationship improved shortly after Icahn gained control of the company. Both men learned to respect each other.

“We didn't agree on many things because those guys generally are more short-term managers while the people who had been there for quite a while were taking more of a long-term view,” Pearson said. “But he didn't lie to me, and I didn't lie to him.”

Pearson was the last TWA executive to leave the airline after Icahn gained control.

“I think maybe it was simply because I truly believed eventually we would prevail. Not that we would get Carl out, but that we would be able to live with a major shareholder,” Pearson said. “Obviously that was naive on my part. But I believed in TWA, and I believed in the people at TWA.”

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by Adam Wilmoth
Energy Editor
Adam Wilmoth returned to The Oklahoman as energy editor in 2012 after working for four years in public relations. He previously spent seven years as a business reporter at The Oklahoman, including five years covering the state's energy sector....
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