I was truly delighted. Teva’s board committed to take the initiative, to reduce its size, to infuse itself with pharma-experienced directors and to revamp corporate governance. What a relief! I could now take down my “activist” shingle and forget about Teva. I wrote to Phil Frost the day of his announcement:
Dear Dr. Frost,
Thank you for your responsiveness to our January 20th letter. Your letter to shareholders of today is a welcome step in the right direction and greatly appreciated.
As you know, during the past several months I have been actively trying to influence Teva’s course, particularly on governance matters. I have been doing so not only on my own behalf, but on behalf of some twenty institutional and private investors, who share my concerns. This has not been “activism” in the usual sense, as my purpose has not been to achieve any kind of personal or financial reward. My only goal has been for Teva, as Israel’s crown jewel, to be not only a great commercial success, but also managed and governed by the highest standards, befitting the company that has become a symbol of Israel itself and the face of its business community.
Again, I applaud your statement and eagerly look forward to watching from the sidelines as Teva’s board delivers on this promise. When I say “from the sidelines”, it is my way of saying that, if Teva continues on this course, as presently appears, I have other important business to attend to and being an “activist” shareholder is not on the list.
Wishing you and Teva the greatest success.
On the same day I wrote to my investor network to make my farewells:
I am very pleased to report that today, Teva’s Chairman, Phillip Frost, sent me a personal note together with the attached letter, issued today to Teva shareholders, stating that Teva’s board will conduct a “…review of Teva’s governance, including, among other things, the size and composition of the Board. As part of this review, we intend to reduce the size of the Board while also adding new Board members with global healthcare experience.”
With this notice, Teva appears to be getting back on track. I expect that the additional governance demands which we made, such as amendment of the Articles of Association, will now be met as a matter of course and will come at the initiative of Teva’s board. I expect too that Dr. Frost’s tenure may be nearing its time. After all, revamping the Board’s structure and rejuvenating its composition, while upgrading Teva’s standards of governance – all at Frost’s own leadership – would seem an ideal segue for an honorable retirement.
Needless to say, I am delighted with this outcome and, as I stated in my response to Phil Frost’s personal letter, I’m done. I want to thank you for your support these past weeks and wish you and your investment in Teva great success. If all goes as I hope, you won’t be hearing from me again.
At Phil Frost’s initiative, we met on February 1st in Tel Aviv. It was a great meeting. We discussed all of the open issues, from governance to Board composition. I was pleased to hear from Phil that he shares our views and intends to follow up with actions accordingly. He said that he would keep me in the picture and we agreed to stay in touch.
By the last week in May, I still hadn’t heard a word from Teva’s board regarding its proposals for revamped corporate governance, amendment of the Articles, the new director slate, etc. – so on May 25th I sent Dr. Frost a reminder that:
The expectation of many institutional shareholders is that Teva’s board will undergo not a perfunctory change but a substantial upgrade – to be approved at the coming AGM – and that Teva will put forward a credible slate of new directors with global healthcare experience, as promised. There is also serious concern about Chair succession, most fearing an internal appointment.
Phil, my sense following our face to face meeting has been that these issues can be resolved without “activism” and without involving other shareholders. However, I have been unable to provide any concrete feedback to the mounting inquiries that I have been receiving, which, naturally, has frustrated many. I have assured my network that you are dealing with the matter, but that has been inadequate. They want to know that these changes will in fact happen. Frankly, I too would like to be reassured that the board changes will be more than cosmetic. There is deep and very real concern that the board is… unable to provide Management with the pharma-experienced guidance and mentoring needed for Teva to succeed.
Your January assurances were welcomed by all, but need to be acted upon.