Teva rebel investor Landa's gearing up for a proxy fight--and he can win, he says

Benny Landa

Rebel investor Benny Landa has already won some of his demands from Teva's ($TEVA) leadership, including a smaller board with more pharma experience. Now, he's angling for more boardroom changes--and if Teva won't make them, he says, he will.

Landa teamed up with Ruth Cheshin, a member of Teva's founding family, to lead a proxy charge against Teva's old guard. It's set to hit its pinnacle at the generics giant's annual shareholder meeting at the end of this month, Reuters reports. On their agenda: Shoot down the reelection of current board member Ory Slonim and--a more unusual target--the purchase of liability insurance for directors and officers.

In a Monday blog post seen by the news service, Landa slammed Slonim for his lack of pharma industry know-how, a criticism he's repeatedly leveled against Teva's current board. As for a vote against the insurance resolution, it will convey the message that "shareholders will not rubber-stamp the board's proposals," Landa wrote. 

Teva, for its part, disagrees, according to a statement seen by Reuters. After Landa and Cheshin presented a position paper last month calling for the "no" votes, the Israeli drugmaker said Slonim's reelection would "serve Teva and its shareholders well" and that the attack on the insurance policy "lacks a basis in fact."

But according to Landa--who, combined with Cheshin, controls a 0.3% Teva stake--shareholders are on his side. His network of 20 shareholders includes the company's 14 largest institutional investors, he claims. Why haven't they come forward themselves to challenge Teva's board? Because "their policies do not permit them to be activists," he says.

"I think they are relieved that someone is taking the lead on making these changes, which they themselves cannot do but they can certainly support," he wrote.

Teva's board has been under fire since internal conflicts spurred then-CEO Jeremy Levin to hit the road. While Chairman Phillip Frost has characterized the differences between the board and Levin as "subtle," others have said the board's interference--Frost's in particular--was disabling.

Now, the conflict is boiling between a Teva team intent on keeping its strong identity as an Israeli company--the country's largest, in fact--and some newer hands who want to jettison some of the old ways, in part to keep Teva competitive on the global stage.

Teva Chairman Dr. Phillip Frost--Courtesy of Teva

And Frost won't stand in the middle of that. After pledging a board revamp--including a slimmed-down slate of directors and the appointment of a longtime Pfizer vet--he'll be making an early exit by year's end. But Landa is none too pleased with the successor he says the board has already chosen--Vice Chairman Amir Elstein, a candidate he views as part of that former group.

Teva, on the other hand, says it hasn't yet tabbed Frost's replacement. And if it is Elstein it's eyeing, Landa plans to make sure the company can't do so without a fight.

"Were it not for the public exposure now and for the proxy fight, I think it would have been a forgone conclusion that the board would simply have appointed one of its own. Hopefully that will now be more difficult for them," he said.

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