Allergan faces flak from key shareholder post appointment of ex-Celgene CEO to its board

By PharmaCompass

2019-02-21

Impressions: 77 Article

On Tuesday, Allergan Plc announced that Robert J. Hugin, former CEO and chairman of Celgene Corporation, has been appointed to Allergan’s Board of Directors, effective immediately. Allergan also called for an eventual division of the chairman and CEO roles at the company. At present, Brent Saunders is the chairman and CEO of Allergen.

However, post this announcement, hedge fund Appaloosa LP posted a letter bashing Allergan’s move. Appaloosa even went on the extent of saying that it would be better for Allergan to go ahead and explore other options, like a sale of the company.

Appaloosa prodded the drugmaker for numerous shortcomings — from billions in write-downs, embarrassing legal maneuvers (such as the Mohawk patent gambit), big paydays and a seriously deflated stock price.

The Appaloosa letter said: “Your announcement today that you will separate the roles of Chairman and CEO at some vague future date falls short of improved governance and once again lays bare your reluctance to hold management accountable for its dismal performance.”

In response to Appaloosa’s letter, Allergan said: “While we appreciate the input of Appaloosa as we do all of our shareholders, we strongly disagree that an immediate separation of the CEO and Chair positions is warranted. Implementing a leadership change in the manner Appaloosa is recommending would be highly disruptive to the Company and diminish Mr Saunders’ ability to continue to execute Allergan's strategy to create a world-class global biopharmaceutical business and develop the Company's promising pipeline. In contrast, the shareholder proposal that our Board supports minimizes disruption and allows for the separation of the Chair and CEO positions with the next leadership change, as these resolutions typically provide.”

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