Two former Pfizer executives have stepped back from hedge fund Starboard Value’s campaign to push for changes at the pharmaceutical giant after previously advocating for the activist investor’s efforts, according to a report by the Financial Times.
Former Pfizer CEO and Chairman Ian Read and ex-Chief Financial Officer Frank D’Amelio announced their decision to disengage from Starboard’s initiative on Wednesday.
The report cites a joint-statement released by the pair through Pfizer’s long-time adviser Guggenheim Partners as reading: “We are fully supportive of Pfizer Chairman and CEO Albert Bourla, senior management, and the board, and we are confident that they will deliver shareholder value over time.”
While it’s not uncommon for activists to collaborate with major shareholders, it’s unusual for former top executives to align themselves with activist investors against their former company’s leadership.
Starboard Value has built a $1bn stake in Pfizer, as previously reported by the Financial Times, and while the hedge fund has yet to publicly outline its plans, sources familiar with the matter indicated that Starboard views Pfizer’s management as inefficient and believes the company mishandled the proceeds from its Covid-19 vaccine windfall by embarking on a costly $70bn acquisition spree.
The hedge fund enlisted the support of Read and D’Amelio, both long-serving Pfizer veterans, to bolster its position, with the two former executives even meeting with several of Pfizer’s board members over the weekend to discuss Starboard’s strategy for reshaping the company.
Read had personally selected Albert Bourla as CEO in 2019, while D’Amelio had served as CFO under Bourla.
Pfizer’s market capitalisation has declined by nearly half since its pandemic-era peak, when the success of its Covid-19 vaccine led to record revenues. As of Wednesday, the company’s market value stood at $171bn. The stock had been relatively stagnant over the past year, but news of Starboard’s stake led to a 5% boost in Pfizer’s share price over the past week.
