Investor passes on deal offering CEO’s resignation and shared control of the board
Activist investor First Manhattan Co (FMC) has rejected a settlement offer, including the resignation of the chief executive officer, in its proxy battle with US drug maker Vivus, and has sued the company over allegations it postponed its annual shareholder meeting in an attempt to prevent a change in its board.
FMC rejected a proposal from Vivus that would have seen CEO Leland Wilson step down and give the investor equal representation on the board, with four directors from FMC, four from Vivus management and one independent, Vivus says in a note to investors.
‘It is our desire to end this closely contested proxy battle without handing the company over to [FMC senior managing director Sam] Colin ahead of the vote,’ Wilson says in the IR section of Vivus’ website. ‘We believe our proposal, which included my stepping down as CEO, was extremely fair and balanced. We are very disappointed with Colin’s complete rejection of our proposal. If you believe our proposal is in the best interest of stockholders, vote the GOLD proxy card.’
The announcement comes after FMC filed a suit alleging that Vivus, which makes the diet drug Qsymia, delayed its shareholder meeting from July 15 to July 18 because FMC had enough votes to take over the board of directors. FMC, which owns a 9.9 percent stake in the drug maker, further demanded that only votes submitted as of July 15 be counted, according to Reuters.
Yesterday Vivus accused FMC of making ‘false and misleading statements’ to shareholders through a campaign of automated telephone calls.
The months-old dispute centers on sales of Qsymia, which FMC says have been mishandled by Vivus, leading to a decrease of more than 50 percent in the company’s share price in the past year. FMC has proposed nine new directors to completely replace the board, saying the current board lacks the experience to oversee issues such as European approval of Qsymia and boost sales.
Last week, proxy advisory firm ISS recommended that Vivus shareholders vote in favor of three of the nine board members proposed by FMC, while Glass Lewis, the other major proxy advisory firm, recommended that shareholders reject all of FMC’s nominees.
