Allergan CEO Saunders hangs on to chairman's title, winning shareholder support — but not by a big enough margin to squelch critics
Brent Saunders will be hanging on to his chairman’s title for awhile longer.
The biopharma reported early Wednesday that 61.3% of its shares were cast in his favor, defeating a move by activist investor Appaloosa to split the CEO and chairman roles Saunders holds and bring in an independent to head the board.
The vote was 160 million shares against an independent chairman, 101 million in favor.
That’s a clear win for Saunders, who gained the support of proxy advisers ISS and Glass Lewis in the struggle to stay on top, but it also spotlights an unusually large and restive group of investors.
SVB Leerink’s Marc Goodman joined the critics a few days ago, noting that Appaloosa — run by billionaire hedge fund manager David Tepper — didn’t necessarily have to win more than 50% of the vote to effect real change. A large enough kickback from rebel shareholders, he speculated, could be enough to force major change at the company — with prospective alterations to management, its R&D/M&A strategy and the board.
There’s no sign of any new compromises this morning, though.
Saunders brought ex-Celgene powerhouse Bob Hugin onto the board recently, giving him a special mandate on M&A review. Allergan has had some setbacks on the deals Saunders struck, and also drew plenty of negative attention for leading a failed effort to protect IP by handing patents over to a Mohawk tribe and then leasing them back.
The key question is what Saunders will do now to placate the shareholders who voted against him, or held their nose as they cast votes in his favor. He’s promised to split the CEO and chairman roles on his departure from the company, but that won’t calm the opposition now.
Image: Brent Saunders. ap images