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Activist Investor Alleges Pfizer Used Threats to Silence Executives
In a bold accusation against Pfizer Inc., activist investor Starboard Value has claimed that the pharmaceutical giant attempted to intimidate its former CEO Ian Read and ex-CFO Frank D’Amelio regarding their support for a proposed turnaround strategy. According to Starboard’s managing member, Jeff Smith, Pfizer’s actions included threats of litigation aimed at persuading the executives to distance themselves from the investor’s initiatives.
In a letter directed to Pfizer’s board on Thursday, Smith asserted that the company, along with its advisors, had threatened to reclaim compensation from Read and D’Amelio as well as to annul their unvested stock options. Smith characterized these tactics as “highly inappropriate, flagrantly unethical, and a significant breach of fiduciary obligations.”
Sources familiar with the situation indicated that the risk of potential legal consequences heavily influenced Read and D’Amelio to publicly endorse the current CEO, Albert Bourla, late Wednesday. This endorsement came in stark contrast to their earlier concerns about the company’s strategic direction under Bourla’s leadership. Notably, both executives had previously shown willingness to support Starboard’s efforts to prompt changes within Pfizer.
As the news of this development broke, Pfizer’s stock experienced a decline, beginning Thursday’s trading session down approximately 2.5%. This drop reflected investor sentiments amidst the internal turmoil spurred by the competing interests of the activist investor and the company’s leadership.
Smith noted that both Read and D’Amelio had expressed reservations regarding Pfizer’s trajectory and were keen on contributing to Starboard’s turnaround plans. However, the climate of intimidation allegedly perpetuated by the company’s management appears to have influenced their final decisions.
In the coming week, Smith is set to meet with Bourla to discuss matters further, although details regarding the agenda remain undisclosed. Observers have expressed concerns that under Bourla, Pfizer’s focus on maintaining a disciplined cost structure and pursuing mergers and acquisitions has faltered.
Ongoing Developments
The unfolding tensions between Starboard Value and Pfizer may reflect broader issues within the pharmaceutical industry, particularly regarding corporate governance and the influence of activist investors. This situation warrants close monitoring as it could have significant implications for Pfizer’s strategic direction and overall market performance moving forward.
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