Tentative Settlement in Hilton’s Battle Over Father’s Estate
BEVERLY HILLS, Calif. (AP) _ Hilton Hotels Corp. Chairman and President Barron Hilton on Friday tentatively settled a dispute with the Conrad N. Hilton Foundation over acquiring stock held in his father’s estate.
The agreement would give Barron Hilton and the charitable foundation control of about 34 percent of outstanding shares of Hilton Hotels common stock, with the chairman having sole voting power over about 25 percent.
The settlement is subject to execution of a definitive agreement in Los Angeles Superior Court, which has jurisdiction over Conrad Hilton’s estate, and approval by the Internal Revenue Service, which will take several months.
The accord provides that of the 13.5 million shares held in the estate, 4 million shares be distributed to Barron Hilton, 3.5 million shares to the foundation, and 6 million shares to Barron Hilton as a trustee of a charitable remainder trust.
That trust would last the lifetime of the 62-year-old Barron Hilton or 20 years, whichever is longer. Sixty percent of income would go to Hilton and 40 percent to the foundation. When the trust expires, remaining assets go to the foundation.
The pact resolves a dispute over 6.78 million shares given to the foundation when Conrad Hilton died in 1979 at age 91. His will gave his son an option to buy all the stock that couldn’t be properly held by the foundation.
An announcement of the deal Friday provided no other details of the tentative agreement. Representatives of parties to the agreement could not immediately be reached by phone.
In March the state’s 2nd District Court of Appeal reversed a Los Angeles County probate judge’s decision and concluded that the stock-purchase option granted by the father to the son covered all 6.78 million shares.
A 1969 IRS rule prohibits private foundations from owning more than 20 percent of any public company. Barron Hilton claimed that since the rule was violated he could exercise his option to buy all the stock at $24 a share, or $163 million, its value at the time of his father’s death.
The foundation reclassified itself as a public-support organization to avoid the rule. In April 1987 a probate judge ruled that action was proper and the foundation didn’t need to divest itself of the stock.
Barron Hilton appealed, resulting in the Court of Appeal ruling last March.