The message over the weekend to Pfizer’s CEO Albert Bourla was blank. But it contained a warning nonetheless.
It came from his former CFO Frank D’Amelio. While there was no content in the email, the “to” field included a representative of Starboard Value, the activist investment firm that had secretly built up a billion-dollar stake in the pharma giant and was planning a campaign to force changes.
The message, apparently sent in error, revealed Starboard’s plans and kicked off a series of calls from D’Amelio and former CEO Ian Read to senior members of Pfizer’s board, informing them of Starboard’s proposal. The two had been approached by Starboard as credible voices with a vested interest in seeing the company’s performance improve, according to a source familiar with the conversations.
The interaction between the company and its former leaders was described to Endpoints News by people familiar with the situation, who spoke on condition of anonymity.
All of those involved either declined to comment or didn’t respond to requests for comment.
Starboard has now gone public with what is likely to be one of biopharma’s biggest and messiest activist fights. At stake is the future of Pfizer, the New York drugmaker that rode a wave of scientific and financial success during the pandemic, only to see its share price stumble as the threat of the virus waned.
Also up for grabs is the reputation of its former leaders, whose disagreement with Bourla — Read’s chosen successor — has now spilled out into public and embarrassing view.
Each day seemingly brings a new twist. Late Wednesday night, Read and D’Amelio, who had been working alongside Starboard, reversed their position and issued a statement saying they now backed management.
“We have decided not to be involved in the efforts of Starboard Value regarding Pfizer,” Read and D’Amelio said. “We are fully supportive of Pfizer Chairman & CEO Albert Bourla, senior management and the board, and we are confident that over time they will deliver shareholder value.”
Hours later, Starboard issued its own statement for the first time making its position public, implying that Read and D’Amelio had been pressured by the company.
“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.
A person familiar with the conversations between the former executives and the Pfizer side confirmed that there had been discussions between Read and D’Amelio and outside lawyers associated with the company. It’s not clear when those discussions took place, and if they were directly related at the start to the Starboard matter, or happened earlier.
Top executives at large companies often depart with millions of dollars in stock and sometimes options, as well as agreements not to disparage their former employers.
D’Amelio left Pfizer in 2021 with significant equity interests, including shares that had yet to vest that were valued at $12.4 million at the end of 2022, in addition to just over two million in stock options that held a range of exercise prices between $22.89 and $45.96, according to a proxy filing from March 2023. It’s unclear what of those securities he still owns.
For Read, who stepped down as CEO at the start of 2019, the last proxy to detail his outstanding equity was filed in early 2020. He had roughly $35 million worth of stock and equity incentive awards that had not yet vested at that time. It’s not clear when, or if, those shares vested and what their current value is.
Starboard is expected to meet with Bourla and the company’s lead independent board director on Oct. 16. The company has already made several rounds of cost cuts, changed out several top executives and shuttered several research programs. It’s also engaged in a campaign of dealmaking — with mixed success — to reload its post-pandemic pipeline.
Editor’s note: This story has been updated to add details of Read and D’Amelio’s equity holdings.