Pfizer Chairman and CEO Ian Read gestures during a panel meeting at the World Economic Forum (WEF) in Davos, Switzerland, Tuesday, Jan. 17, 2017.
Simon Dawson | Bloomberg | Getty Images
Activist Starboard Value charged Pfizer Threatening lawsuits against the company’s former chief executive and chief financial officer in an effort to distance themselves from investors’ nascent turnaround drive at the pharmaceutical giant.
In a letter to Pfizer’s board of directors on Thursday, Starboard managing member Jeff Smith said the company or its advisers had also “threatened” to withdraw past claims from former CEO Ian Reid and former CFO Frank D’Amelio. compensation, and cancel their unvested stock.
Smith asked the board to establish a special committee to investigate the matter, describing it as “grossly inappropriate, blatantly unethical, and a serious breach of fiduciary duty.”
A person familiar with interactions between the company and the two former executives said the risk of legal liability was a driving factor in Reid and D’Amelio’s public support for Pfizer CEO Albert Bourla late Wednesday night.
Pfizer’s shares fell overnight as news broke of the departure of two senior executives, opening down about 2.5% in early trading on Thursday.
Starboard’s Smith said that when the activist approached both executives, both expressed “concerns” about the direction of Pfizer under Bourla and offered to help Starboard turn things around.
Starboard did not respond to a request for comment. A Pfizer spokesman declined to comment.
Starboard’s Smith and Bourla are scheduled to meet in person next week, Smith said, confirming previous reports. The agenda of the discussions was unclear, but people familiar with Starboard’s thinking have previously said Pfizer’s focus on a strict cost structure and mergers and acquisitions suffered under Bourla.
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