It's a little like the aging pitching star having a bad inning in a playoff game. The coach has to decide whether to stick with the experience and record of performance in high-stakes games of a beloved veteran versus removal of the vet for energized but less experienced talent.
Genzyme's would-be coach Carl Icahn says yank the vet, Henri Termeer (photo). Bring in the new talent. Do it yesterday.
It would be nice to know there was at least a little deliberation behind the move. After all, Termeer has nearly 30 years as Genzyme president and is listed as a manufacturing expert. So too with Charles Cooney, a chemical engineering professor and 27-year member of the Genzyme board, according to Reuters. These men of science and process are two of the four board members that Icahn (photo) wants to send to the showers.
Icahn argues to Genzyme (NASDAQ: GENZ) investors that operations at the company's Allston, MA, manufacturing plant went off the tracks under the watch of these experts, leading to FDA warnings, plant contamination and shutdown, and ultimately a consent decree and $175 million in financial penalties. Genzyme now works with increased FDA scrutiny, and will do so for the next seven to eight years--two to three years in remediation under the consent decree, and another five years under the FDA-OK'd consultancy Quantic. The manufacturing quality specialist will draft the remediation plan with Genzyme and remain on the job for its implementation. "We must immediately change the board to show that Termeer is no longer 'king of the company' even if he does remain as CEO," Icahn told the SEC, according to Reuters.
In investor terms, that sounds good. But it's questionable in biomanufacturing terms. Icahn admits that his nominees to the board--to replace Termeer, Cooney and two sitting board members--have no manufacturing expertise. But they will "hold management highly accountable for fixing existing problems and effectively planning for potential future issues," according to the Reuters report.
That sounds like a prescription for the same drug that gave Johnson & Johnson the adverse events of Tylenol. Chairman and CEO William Weldon, a 40-year vet of J&J, rose through the ranks in sales, marketing and international management positions before arriving at the executive suite. Yet his informed control led to the halving of the corporate compliance staff and elimination of a corporate program that gave operating unit presidents regular compliance reviews.
Holding management "highly accountable" is at best a thin promise, and it's in the job description of every executive anyway. The focus of board members, however, is perhaps better reserved for executive accountability, rather than management's. But either way, Icahn's logic does not support his argument to oust Termeer. But that logic does make it clear that it's time for Weldon to go.
- here's the article