Chances are growing that Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) will obtain its shareholders' consent to its proposals at the annual meeting. Institutional Shareholder Services Proxy Advisory Services (ISS), the leading US independent proxy advisory firm, is recommending that shareholders accept all of Teva's proposals, despite opposition from Teva minority shareholder and high-tech entrepreneur Benny Landa. Landa and Ruth Cheshin, daughter of a Teva founder, have been taking an active role, already partly successful, to change the board of directors and reduce its size. They are opposing the reappointment of Ory Slonim to the board of directors and the purchase of director liability insurance policies.
ISS is advising the US investment institutions holding Teva shares, and it is extremely likely that most of them will vote according to its recommendations at the shareholders meeting. The ISS recommendations also mention Landa's campaign, writing that no new proposals were added to the meeting's agenda as a result of his published statement.
ISS is recommending approval of the directors proposed by Teva: Jean-Michel Halfon, Slonim, Dan Propper, and Joseph Nitzani. Landa opposed Slonim, demanding the appointment of directors with global pharma marketing experience.
"The board of directors is mostly independent, and the company meets the standards by having an independent audit committee," the ISS recommendations state. "There is no open concern about the candidates or their remuneration, and we therefore recommend supporting the proposals."
Landa and Cheshin also oppose the purchase of director liability insurance policies, which will provide annual coverage of up to $600 million, and they recommend that the other shareholders oppose it "until Teva improves it corporate governance."
ISS disagrees, however, recommending support for Teva's proposal, with a slight reservation. "The ratio between Teva's market cap and the insurance coverage appears reasonable, and the proposed policy conforms to the law," ISS explains. "At the same time, it would have been preferable for the company to add information about the amount of the premium and the deductible in the proposed policy, and about the rationale for increasing the coverage from $350 million to $600 million."
Sources close to Teva said, "The ISS recommendation has put an end to Landa's slander campaign; had he been honest with himself, he would have apologized for the damage he caused to Teva… Landa has made his activism an axe to grind, and is engaging in self-promotion camouflaged as activism." The sources defined Landa's behavior as "a settling of personal accounts appropriate to a backwoods swamp, not a global company," and accused him of behaving callously, disrespectfully, and discreditably.
Amazement at moving the meeting forward
Glass, Lewis & Co., another consultant firm, has yet to publish recommendations on Teva, but its blog, written yesterday by Andrew Gebelin about the Landa and Cheshin's struggle in Teva, expresses amazement at the advancement of the annual shareholders meeting, which usually takes place in September, to July. He asserts that this change has denied Landa and Cheshin the legal possibility of putting their own proposals on the meeting's agenda.
Published by Globes [online], Israel business news - www.globes-online.com - on July 17, 2014
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