Activist investor Active Ownership Capital (AOC) succeeded in convincing shareholders of Stada to remove the German drugmaker’s supervisory board chairman in a voting marathon, but failed to install its candidate in the post.
The supervisory board elected its former deputy Carl-Ferdinand Oetker as chairman early on Saturday, after shareholders voted to oust Martin Abend from the role by a slim majority of roughly 56 percent at an annual general meeting that lasted 14 hours.
AOC, which holds 7 percent of Stada in shares and options, had campaigned to replace six of the nine supervisory board members including Abend and Oetker, arguing they were preventing the company from modernizing and becoming international.
In a statement after being elected chairman, Oetker, a banker and a member of the eponymous German family-owned baking goods group, said he would seek to conduct a dialogue with all shareholder groups, but fell short of specifically naming AOC.
Oetker’s appointment marked another change at the top of the drugmaker after Hartmut Retzlaff quit as CEO last week on health grounds after 23 years, and was replaced by Matthias Wiedenfels.
“Stada shareholders today have clearly spoken out in favour of a change at the top of the supervisory board and the organisation’s corporate governance,” AOC said in a statement after the AGM.
It succeeded in getting only one of its candidates voted onto the board on Friday, Eric Cornut, a former manager at Swiss drugmaker Novartis (NOVN.S), and said it was now looking into legal measures to challenge the second-round run-off election of board directors excluding the chairman.
AOC had wanted Cornut to become chairman, but he failed to garner enough support on a board skewed in favor of Stada-backed candidates.
MORE MODERN APPROACH
Abend delegated his job of chairing the AGM to a lawyer, saying he did not want to be accused of any bias in the way he ran the meeting.
Shareholders at the AGM, where the voting procedure took five hours, also backed scrapping so-called “vinculated” shares – a type of stock that under German securities trading laws can only change hands with the consent of top managers, otherwise the shares lose their voting rights. AOC had called for their abolition.
Earlier on Friday, one of AOC’s founding partners said the investor had no desire to break up the company and had only campaigned for a modern overhaul.
Former CEO Retzlaff listed Stada on the stock exchange, opened its shareholder base to non-pharmacists and increased its revenue more than 20-fold. But critics said he ran the company like a personal fiefdom, and the media referred to “System Retzlaff”, which included a tight circle of advisers and a plum job for the CEO’s son.
“I have a problem with those people who chose their own interests over the interests of Stada and its shareholders,” AOC founding partner Florian Schuhbauer told Friday’s shareholder meeting, referring to Retzlaff and long-time Chairman Martin Abend.
“Those two men over many years simply forsook their responsibilities,” he said.
Schuhbauer rejected the description of AOC as an “activist” investor, saying the firm considered itself an “anchor investor” – a style of activism that is gaining popularity in Germany.
In a report published on Friday, JPMorgan noted the growing number of shareholder campaigns in Europe – 99 in the 12 months to end-June compared with 61 in the year-earlier period.
Stada’s new CEO Wiedenfels, addressing the shareholder meeting, promised a more modern, dynamic approach to running the company, saying it had to improve its transparency, flexibility, hierarchies and communication, although it had no need to change its strategy.
“We have a huge potential that we have not yet taken advantage of,” he said.
Another activist investor, Guy Wyser-Pratte, who has a stake of just under 3 percent, said last month that buyout firm CVC Capital Partners was interested in buying the drugmaker and that would be a better plan than AOC’s suggested board overhaul.
By Alexander Huebner and Georgina Prodhan
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