Allergan Plc on Friday agreed to split its chairman and chief executive roles, but only at its next leadership change, as the drugmaker pushed back against claims from activist hedge fund Appaloosa LP that an independent chair could help current CEO Brent Saunders boost the company’s sagging share price.
Saunders, 49, put together the current version of Allergan through a series of deals to roll up several pharmaceutical companies in 2014, and has run the company since then.
He has no plans to step down, a source close to Allergan said.
The company said on Friday that splitting the roles now – as Appaloosa has requested – “could impede the board’s effectiveness by creating a crisis of confidence in Mr. Saunders at a time when leadership stability and effectiveness is critical.”
The Botox maker announced the change in its annual proxy statement, filed with the Securities and Exchange Commission late on Friday afternoon.
Appaloosa, led by billionaire hedge fund manager David Tepper, has been agitating for changes at Allergan since last year as Allergan’s shares have sagged. Beyond the proposal to separate the chairman and CEO roles, Appaloosa has said the drugmaker should consider a sale or breakup.
A spokesman for Tepper did not immediately respond to a request for comment.
Allergan’s shares are off around 24 percent since October and are trading at less than half their historic high of over $330 hit in 2015. On Friday, they fell 2.8 percent to $149.30.
The company has recently disappointed investors due to a worse than expected revenue forecast for 2019 and the failure of depression treatment rapastinel earlier this month.
The company undertook a review of its corporate strategy last year, but the result of that review may only be the sale of its relatively small infectious diseases unit and a commitment to remain disciplined in its spending.
Allergan said in the regulatory filing that it had formed a board committee to oversee mergers, acquisitions, divestitures and other transactions. Robert Hugin, the former CEO of drugmaker Celgene Corp, will helm that committee.
The company also said director Catherine Klema will not be standing for re-election. If the company replaces Klema, it will have named five new directors to its 12-person board since the beginning of last year.
By Michael Erman and Saumya Sibi Joseph
Source: Reuters
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