The activist investor targeting Pfizer claims that the company’s former CEO and CFO, who were previously working with the investor, were pressured to flip and side with the company.
In a public letter Thursday to Pfizer’s board of directors, investor Starboard Value alleged that former CEO Ian Read and CFO Frank D’Amelio were threatened with a clawback of compensation and unvested stock, as well as potential litigation.
“We understand that people within Pfizer and/or their representatives have contacted Mr. Read and Mr. D’Amelio and purportedly threatened to commence costly litigation against them, claw back prior compensation, and cancel unvested performance stock units unless they publicly release a statement supporting the current Chief Executive Officer, Dr. Albert Bourla,” Starboard said.
Pfizer didn’t immediately respond to requests for comment, nor did Read and D’Amelio.
Starboard said in its letter that it wasn’t certain whether Pfizer’s board knew of the events. It called on the board to launch a special committee to investigate the claims.
Starboard’s statement is the first of what could be a protracted messy battle for the future of the drugmaker. The investor said it had previously spoken with Read and D’Amelio, who shared Starboard’s perspective that the company needed a change in direction.
Pfizer’s shares $PFE have lost half their value since their pandemic peak. The company has engaged in several rounds of cost-cutting, trimmed some assets, and changed out several senior executives.
News first broke of Starboard’s $1 billion stake in the company on Sunday, with Read and D’Amelio “happy to help” with the activist’s effort, according to a source familiar with the discussions. The two executives called senior board members on Sunday, including Bourla.
But on Wednesday night, Read and D’Amelio rescinded their support for Starboard, issuing a statement that they “have decided not to be involved in the efforts of Starboard Value regarding Pfizer.”
The dizzying saga preempts what’s now set to be an even more contentious meeting between Bourla, independent director Shantanu Narayen and Starboard on Oct. 16. Starboard said “possibly other members of the board” may also join.