In my February 24 column, I wrote that Teva's late warning about the fourth quarter probably stemmed from contempt on the part of Teva's management for the company's shareholders. Last week, it turned out I was right.
The Israeli stock exchange does have many problems. It sometimes reacts to announcements irrationally, but show me one stock exchange anywhere in the world that doesn't (the Internet craze that has hit the US is rational?).That is a long way from saying that that Israeli market players are stupid.
Dan Suesskind knows that Israeli investors prefer to wait and see how their US colleagues react to significant announcements. He also knows that most important analysts and institutional investors are in the US, Despite this, he decided to publish the announcement during trading hours in Israel, and the market reacted the way it reacted. What will happen tomorrow, when Mr. Suesskind isn't happy with the US market's response?
Even if trading in Israel only represents a fraction of total trading in the share, and Israeli shareholders only hold a small percentage of the company, Suesskind has no right to express himself the way he did. He shouldn't forget that the shareholders are boss, not him. They approve his salary and the quantity of options he receives each year. They, and no-one else. Suesskind should remember that company managments can be changed, and a CFO has no say in who holds shares in the company where he works.
In the US, an announcement like this one would have aroused a serious commotion. Shareholders would certainly have demanded an official apology, if not resignation. I don't understand why the mutual funds that hold the share haven't responded; perhaps they don't mind if they are held in contempt. . As a partner in the company, a shareholder ought to demand that he is treated with respect. A shareholder who fails to demand this is not carrying out his duty as a partner in the company. An institutional investor that fails to do this also damages the small investors whose money it invests.
Published by Israel's Business Arena on May 17, 1998