Only days after rebel investors demanded change at Allergan, the company is bringing in a new face for its board leadership.
On Thursday, Allergan announced that director Patrick O'Sullivan will retire from the company's board in July. The company has appointed Thomas Freyman, a former Abbott Laboratories executive, for a board position effective immediately. Freyman was previously executive vice president of finance and administration at Abbott and brings nearly 40 years of industry experience to the director role, Allergan said. He retired from Abbott last year.
The change is part of what Allergan calls an "active board refreshment process." Over the last 16 months, the company has brought in four new independent directors.
But the director swap also comes right after Senator Investment Group and Appaloosa demanded changes at Allergan. In a letter to company leadership, the funds called for Allergan to split its CEO and chairman roles—both currently held by Brent Saunders—plus "upgrade" leadership in key units and replace at least two board members.
The letter from Appaloosa and Senator Investment Group came in response to what the investors called a "half-hearted" strategic review recently completed at Allergan. In May, the company said it would sell its women's health and infectious disease units to focus on key therapeutic areas of medical aesthetics, CNS, eye care and GI.
After learning details of the strategic review, the investors wrote that it's "now clear that fresh thinking is absent from the current regime, thus explaining the market’s complete loss of confidence in the stock." They called on Allergan to rethink its M&A strategy and said if the company's leadership doesn't act, investors can expect the stock to "continue to languish."
Allergan responded that it welcomes shareholder input and that it has prioritized board refreshment.
Competitive threats to Botox and Restasis have been weighing on Allergan investor sentiment for some time, and in January, the drugmaker announced 1,400 job cuts to account for Restasis' expected loss of exclusivity. The news didn't improve investor spirit, and in March Allergan kicked off a strategic review.
Since the letter, Bloomberg reported that legendary investor Carl Icahn has built a small position in the company. Icahn previously helped install Saunders as CEO of Forest Labs, before that company was acquired by Actavis. Actavis later acquired Allergan and took its name. Touting his confidence in Saunders, Icahn in 2016 boosted his Allergan investment, but he dumped most of his shares later that year.