Elan report clears company; directors resign

The power struggle on Elan's board is over--and management won. Two dissident directors who'd been agitating for a new probe of the company's management have instead agreed to back off and resign.

The resignations of Jack Schuler and Vaughn Bryson come after a board meeting where directors reviewed an independent report on the company's governance. The probe centered on several deals involving companies with ties to Elan officials. Conducted by a U.S. law firm, the investigation found that management didn't do anything wrong and didn't break any laws, either.

Schuler and Bryson had objected to that review, saying that they wanted to hire their own law firm to check things out. Elan blocked the effort in court, and CEO Kelly Martin (photo) issued a letter to shareholders defending himself and the company.

Now, the two directors--who were added to the board at the insistence of unhappy shareholders--say they accept the first report and its recommendations for changes, including a new conflicts-of-interest policy and new public reporting requirements. You can almost hear Martin sighing with relief. But he still has to contend with activist shareholder Ib Sonderby.

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