Teva faces shareholder rebellion at end of July
Entrepreneur Benny Landa leading right for big changes in corporate governance.
REUTERS - A group of investors in Israel’s Teva Pharmaceuticals, led by Israeli industrialist Benny Landa, is looking to shake up the drugmaker’s board at the annual shareholders’ meeting later this month.
Landa has called on shareholders to shoot down two board resolutions, including the reelection of a sitting director, and told Reuters he is confident he has rallied enough support among investors to win the battle.
He also said he was informed that the board will appoint vice chairman Amir Elstein to replace Phillip Frost, who is giving up the post of chairman at the end of the year. A spokesman for Teva said there was no decision yet.
The proxy fight, led by Landa and Ruth Cheshin, a member of Teva’s founding family, will come to a head at the July 30 meeting. The two hold a combined 0.3% stake in Teva, the world’s largest generic drugmaker and Israel’s biggest company.
Landa has been an outspoken critic of Teva’s board in recent months, saying it was too big and lacks the needed global pharmaceutical experience. He noted that since Frost took the helm at Teva in 2010, the stock is down 10%, even after this year’s rally, compared with a 74% rise in the S&P 500.
“My network is about 20 investors, which includes the 14 largest institutional investors in Teva,” Landa said.
“Because they themselves [and] their policies do not permit them to be activists, I think they are relieved that someone is taking the lead on making these changes, which they themselves cannot do but they can certainly support,” he said.
To address investor and analyst criticism, Frost announced last month that the board would be reduced to 13 from 15, and appointed a senior pharmaceutical executive to the board.
Landa and Cheshin presented a position paper last month calling for a vote against the reappointment of Ory Slonim to the board, and liability insurance for directors and officers.
In a blog posted on Monday, Landa explained that he felt Slonim did not have “big-pharma” expertise. A vote against the insurance resolution will send the message that “shareholders will not rubber-stamp the board’s proposals.”
In response to Landa and Cheshin’s paper, Teva praised Slonim’s qualifications and said his reelection would “serve Teva and its shareholders well.” The company also said that the attack on the insurance policy “lacks a basis in fact.”
Landa, who sold his digital printing company Indigo to Hewlett-Packard for $830 million in 2002, said there was a chance his public stance could alter that decision and the board could still choose someone with pharmaceutical experience.
“Were it not for the public exposure now and for the proxy fight, I think it would have been a forgone conclusion that the board would simply have appointed one of its own. Hopefully that will now be more difficult for them,” he said.
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