Ex­clu­sive: How an ac­ci­den­tal email tipped Pfiz­er off to an ac­tivist in­vestor’s plan

The mes­sage over the week­end to Pfiz­er’s CEO Al­bert Bourla was blank. But it con­tained a warn­ing nonethe­less.

It came from his for­mer CFO Frank D’Ame­lio. While there was no con­tent in the email, the “to” field in­clud­ed a rep­re­sen­ta­tive of Star­board Val­ue, the ac­tivist in­vest­ment firm that had se­cret­ly built up a bil­lion-dol­lar stake in the phar­ma gi­ant and was plan­ning a cam­paign to force changes.

The mes­sage, ap­par­ent­ly sent in er­ror, re­vealed Star­board’s plans and kicked off a se­ries of calls from D’Ame­lio and for­mer CEO Ian Read to se­nior mem­bers of Pfiz­er’s board, in­form­ing them of Star­board’s pro­pos­al. The two had been ap­proached by Star­board as cred­i­ble voic­es with a vest­ed in­ter­est in see­ing the com­pa­ny’s per­for­mance im­prove, ac­cord­ing to a source fa­mil­iar with the con­ver­sa­tions.

The in­ter­ac­tion be­tween the com­pa­ny and its for­mer lead­ers was de­scribed to End­points News by peo­ple fa­mil­iar with the sit­u­a­tion, who spoke on con­di­tion of anonymi­ty.

All of those in­volved ei­ther de­clined to com­ment or didn’t re­spond to re­quests for com­ment.

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Star­board has now gone pub­lic with what is like­ly to be one of bio­phar­ma’s biggest and messi­est ac­tivist fights. At stake is the fu­ture of Pfiz­er, the New York drug­mak­er that rode a wave of sci­en­tif­ic and fi­nan­cial suc­cess dur­ing the pan­dem­ic, on­ly to see its share price stum­ble as the threat of the virus waned.

Al­so up for grabs is the rep­u­ta­tion of its for­mer lead­ers, whose dis­agree­ment with Bourla — Read’s cho­sen suc­ces­sor — has now spilled out in­to pub­lic and em­bar­rass­ing view.

Each day seem­ing­ly brings a new twist. Late Wednes­day night, Read and D’Ame­lio, who had been work­ing along­side Star­board, re­versed their po­si­tion and is­sued a state­ment say­ing they now backed man­age­ment.

“We have de­cid­ed not to be in­volved in the ef­forts of Star­board Val­ue re­gard­ing Pfiz­er,” Read and D’Ame­lio said. “We are ful­ly sup­port­ive of Pfiz­er Chair­man & CEO Al­bert Bourla, se­nior man­age­ment and the board, and we are con­fi­dent that over time they will de­liv­er share­hold­er val­ue.”

Hours lat­er, Star­board is­sued its own state­ment for the first time mak­ing its po­si­tion pub­lic, im­ply­ing that Read and D’Ame­lio had been pres­sured by the com­pa­ny.

“We un­der­stand that peo­ple with­in Pfiz­er and/or their rep­re­sen­ta­tives have con­tact­ed Mr. Read and Mr. D’Ame­lio and pur­port­ed­ly threat­ened to com­mence cost­ly lit­i­ga­tion against them, claw back pri­or com­pen­sa­tion, and can­cel un­vest­ed per­for­mance stock units un­less they pub­licly re­lease a state­ment sup­port­ing the cur­rent Chief Ex­ec­u­tive Of­fi­cer, Dr. Al­bert Bourla,” Star­board said.

A per­son fa­mil­iar with the con­ver­sa­tions be­tween the for­mer ex­ec­u­tives and the Pfiz­er side con­firmed that there had been dis­cus­sions be­tween Read and D’Ame­lio and out­side lawyers as­so­ci­at­ed with the com­pa­ny. It’s not clear when those dis­cus­sions took place, and if they were di­rect­ly re­lat­ed at the start to the Star­board mat­ter, or hap­pened ear­li­er.

Top ex­ec­u­tives at large com­pa­nies of­ten de­part with mil­lions of dol­lars in stock and some­times op­tions, as well as agree­ments not to dis­par­age their for­mer em­ploy­ers.

D’Ame­lio left Pfiz­er in 2021 with sig­nif­i­cant eq­ui­ty in­ter­ests, in­clud­ing shares that had yet to vest that were val­ued at $12.4 mil­lion at the end of 2022, in ad­di­tion to just over two mil­lion in stock op­tions that held a range of ex­er­cise prices be­tween $22.89 and $45.96, ac­cord­ing to a proxy fil­ing from March 2023. It’s un­clear what of those se­cu­ri­ties he still owns.

For Read, who stepped down as CEO at the start of 2019, the last proxy to de­tail his out­stand­ing eq­ui­ty was filed in ear­ly 2020. He had rough­ly $35 mil­lion worth of stock and eq­ui­ty in­cen­tive awards that had not yet vest­ed at that time. It’s not clear when, or if, those shares vest­ed and what their cur­rent val­ue is.

Star­board is ex­pect­ed to meet with Bourla and the com­pa­ny’s lead in­de­pen­dent board di­rec­tor on Oct. 16. The com­pa­ny has al­ready made sev­er­al rounds of cost cuts, changed out sev­er­al top ex­ec­u­tives and shut­tered sev­er­al re­search pro­grams. It’s al­so en­gaged in a cam­paign of deal­mak­ing — with mixed suc­cess — to re­load its post-pan­dem­ic pipeline.

Ed­i­tor’s note: This sto­ry has been up­dat­ed to add de­tails of Read and D’Ame­lio’s eq­ui­ty hold­ings.