All's well that ends well is the position most institutional investors are taking on the "standstill agreement" reached earlier this month between Chrysler Corp.'s board of directors and Kirk Kerkorian.
Few institutional investors supported Mr. Kerkorian's methods to increase shareholder value. But fewer argued with the results.
The consensus is that Mr. Kerkorian succeeded in getting more value for his shares, and that Chrysler remains in good financial shape.
"In general, our membership felt it was resolved somewhat quietly and fairly," said Elizabeth Machold, deputy director of the Council of Institutional Investors, Washington.
Chrysler's share price rose to the mid-$50 range from $39 in the spring, when Mr. Kerkorian launched his tender offer. The company will increase its planned stock buyback in 1996 to $2 billion, up from $1 billion. And, cash in excess of its $7.5 billion reserve target will be turned over to shareholders.
Mr. Kerkorian gets to appoint a representative to the board of directors; the board and he agreed on the appointment of James Aljian. Mr. Kerkorian also agreed not to increase his ownership of Chrysler stock and not to solicit proxies or enter into any activity aimed at changing the Chrysler board.
The agreement strikes a balance between shareholder interests and management needs, according to Jon Lukomnik, New York City deputy comptroller for pensions.
The $41.6 billion New York City Retirement Systems and the $26 billion New York City Teachers' Retirement System together own 1.65 million shares of Chrysler, most of it in an index fund.
New York City was one of several institutional investors that joined with the CII in a letter to Robert Eaton, Chrysler chairman and chief executive officer, saying the company will be harmed if actions are taken to increase current returns at the expense of long-term viability.
"Kerkorian's voice will be heard," said Mr. Lukomnik. "There are no financial advantages available to him (Kerkorian) that are not available to other shareholders.
"And Chrysler continues to preserve hard won financial security through its cash reserves, in what is a very cyclical industry," said Mr. Lukomnik.
"This is like sausage making," he said. "The process wasn't pretty, but the product is pretty good."
According to CDA/Spectrum (13f) Institutional Stock Holdings, Mr. Glickenhaus owned almost 2.3 million shares as of Dec. 31, down from the 5.4 million Chrysler shares he held earlier in the year.
"When a stock goes from $39 to $56, we sell," said Mr. Glickenhaus. "We are not permanent investors."
Timothy E. Keefe, assistant vice president, Federated Investors, Pittsburgh, supported management's position against Mr. Kerkorian, but he is nonetheless pleased with the results.
"It's good to have a bit of pressure to remind management about shareholders," said Mr. Keefe. "I think they (management) responded very well."
Federated owns "a couple hundred thousand shares," said Mr. Keefe. The company sold its shares at the announcement of the tender offer, and bought them back at cheaper levels when Mr. Kerkorian's bid failed, he said.
Ronald Stribley, vice president and portfolio manager of Glenmede Trust Co., Philadelphia, said the agreement between the board and Mr. Kerkorian takes the pressure off management and reduces the benefits to shareholders.
"As long as he (Kerkorian) was out there pressuring management, shareholders were better off," said Mr. Stribley. "The arrangement takes pressure off management."
In contrast, Quentin Faulkner, a managing partner with Loomis, Sayles & Co. L.P., Boston, gives Mr. Kerkorian little credit for the rise in Chrysler's stock price.
Loomis Sayles owned a little more than 4 million shares of Chrysler on Dec. 31, according to CDA/Spectrum.
Mr. Faulkner attributed the stock price increase to a combination of macroeconomic factors and management's operations.
"I can't make the case that he (Kerkorian) added value," said Mr. Faulkner. "I think (management) was prepared to raise the dividend and buy back stock as cash grew.
"I think he (Kerkorian) expedited it a little bit, but not enough to make a big difference in the stock," said Mr. Faulkner.