NEW YORK (Reuters) - Shareholders of Innoviva Inc. handed a narrow victory to the U.S. respiratory drug company, according to a person close to the matter, as its fight against activist hedge fund Sarissa Capital saw several last minute twists and turns.
Innoviva shareholders supported the company’s three director nominees at the annual meeting, according to the person who has access to the preliminary voting totals.
Sarissa had nominated three of its own directors, after months of pressuring changes at the company.
While Innoviva was spared a board shake up, the narrow victory - even with GSK’s support - shows that a significant portion of its shareholders agreed with Sarissa’s complaints.
The hedge fund, which owns a 2.72 percent stake in Innoviva, had accused the company of spending too much money on executive pay and board compensation, given that its only function is to manage the drug royalties it receives from GlaxoSmithKline Plc.
In a dramatic turn that played out late until Wednesday night, the two sides nearly agreed to avoid the vote through a settlement but the company bowed out of the plan at the last minute when it became clearer that it may win all three seats. The person close to the matter said a settlement would have added two of Sarissa’s director nominees to the board.
Board of director proxy fights that go all the way to a vote often come down to the support of the large index fund managers who have until the very last minute before to cast their ballots.
Innoviva and Sarissa were not immediately available for comment.
GlaxoSmithKline, which has a 29.3 percent stake in Innoviva, previously said it voted in support of the company’s nominees.
Earlier this month, Innoviva announced plans to undertake a review of cost and executive compensation structures that it said could result in ”meaningful savings in our core operating costs that will benefit our financial performance.
Innoviva, which has a market valuation of $1.5 billion as of Wednesday’s close, had 14 employees as of 2016, according to its annual filing. The annual compensation of CEO Michael Aguiar, a point of contention the Sarissa highlighted in its campaign, was $3.56 million in 2015, according to a regulatory filing.
Reporting by Michael Flaherty; Editing by Chizu Nomiyama, Bernard Orr