In the struggle for the character of the board of directors of Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA), yesterday's move will be perceived as defensive - the appointment of Amir Elstein, a scion of one of Teva's founding families, as vice chairman to succeed 84-year old Prof. Moshe Many. Elstein's resignation as chairman of Israel Corporation (TASE: ILCO) in order to take up the new job, as "Globes" wrote yesterday, apparently indicates his next step - to become Teva's chairman in the future.
Teva's current chairman, Dr. Phillip Frost, is no hurry to step down, but in a recent interview with "Globes", he said, "I provide a service here. I feel that this is something almost voluntary. The moment that the board of directors feels that the time has come for someone else, I am always ready with other things that I am doing."
Elstein has previously been mentioned as a possible successor to Frost. In 2012, Elstein and Chaim Hurvitz were a kind of "opposition" to Frost, and they were both mentioned as candidates for the job, but Frost's term was ultimately extended. Commenting on this in the interview, he said, "They might have said here and there that they were interested, but they made no power play. There wasn’t even a discussion."
One assessment holds that in view of the recent upheavals at Teva - the ouster of CEO Dr. Jeremy Levin over disagreements with the board of directors, and the cost cutting plan - Frost has agreed to maintain industrial quiet on the board of directors and to the appointment of Elstein has his deputy.
Dissatisfied shareholders
In the background to these events, foreign shareholders in Teva have expressed dissatisfaction with the company's conduct and especially about its share price, and they are trying to introduce changes in its board of directors and maybe even move its headquarters, which would require a change in the company's articles of incorporation. Teva has no controlling core, and its largest shareholders own 7% of the company. An alliance of several such shareholders could result in such a step.
High-tech entrepreneur Benny Landa, who owns Teva shares estimated to be worth several tens of millions of dollars, is trying to get more directors with an international pharmaceutical background appointed to its board. On the face of it, Many's replacement by Elstein contradicts this wish. Many is a doctor by training and he has medical and academic experience, whereas Elstein does not.
Nonetheless, Elstein's appointment is not seen as out of place. He is a scion of one of Teva's founding families, and he has extensive business and managerial experience (even if his term at Israel Corp. will not be chalked up as a great success, to put it mildly). He has been a director at Teva for years, and he has held managerial posts at the company. Elstein is also the chairman of the search committee for a new CEO.
In any event, Elstein's appointment sends a signal to Teva's foreign shareholders that any attempt to change the board or amend the articles of incorporation will face opposition.
Teva acting CEO Eyal Desheh declined to comment today about matters on the board of directors or the search for a new CEO. However, in talking to "Globes", he agreed to say that the board "was working hard" in the search for a CEO. "Obviously, having an acting CEO is not a good thing, but I cannot say when this will happen," he said.
"Globes": What is the significance of Elstein's appointment as vice chairman?
Desheh: "Elstein will take up his post as vice chairman at the beginning of January 2014, and the fact that he is leaving Israel Corp. indicates his commitment to Teva. As for the search for a CEO, there has been no change. Moshe Many is no longer a young man, but he will stay on a director, which is good. He is an extraordinary man, smart and positive, with a very special CV, and as vice chairman, he was very influential."
You were recently quoted as saying that it would be a good thing to include on Teva's board more directors with an international pharmaceutical background.
"The board of directors has quite a few people with such a background, and Many is one of them."
What can you say about the hostile steps that Benny Landa is taking?
"I read about this in the newspaper, and beyond that, I have little to say."
Published by Globes [online], Israel business news - www.globes-online.com - on December 11, 2013
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