* Industrialist Benny Landa leading investor revolt
* Investors oppose re-election of board member Slonim
* Also oppose directors’ liability insurance
* Landa says board too big, lacks global pharma experience (Recasts with Landa comments)
By Ari Rabinovitch
REHOVOT, Israel, July 14 (Reuters) - A group of investors in Israel’s Teva Pharmaceuticals, led by Israeli industrialist Benny Landa, is looking to shake up the drugmaker’s board at the annual shareholders’ meeting later this month.
Landa has called on shareholders to shoot down two board resolutions, including the re-election of a sitting board member, and told Reuters he is confident he has rallied enough support among investors to win the battle.
He also said he was informed that the board is to appoint vice-chairman Amir Elstein as its new chairman, to replace Phillip Frost who is leaving at the end of the year.
The proxy fight, led by Landa and Ruth Cheshin, a member of Teva’s founding family, will come to a head at the July 30 meeting. The two hold a combined 0.3 percent stake in Teva, the world’s largest generic drugmaker and Israel’s biggest company.
Landa has been an outspoken critic of Teva’s board in recent months, saying it was too big and lacks the needed global pharmaceutical experience.
“My network is about 20 investors, which includes the 14 largest institutional investors in Teva,” Landa said.
“Because they themselves, their policies do not permit them to be activists, I think they are relieved that someone is taking the lead on making these changes, which they themselves cannot do but they can certainly support,” he said.
To address investor and analyst criticism, Frost announced last month that the board would be reduced to 13 members from 15, and appointed a senior pharmaceutical executive to the board.
Landa and Cheshin presented a position paper last month calling for a vote against the reappointment of Ory Slonim to the board and against the purchase of liability insurance for directors and officers.
In a blog posted on Monday, Landa explained that he felt Slonim did not have “big-pharma” expertise, and that a vote against the insurance resolution will send the message that “shareholders will not rubber-stamp the board’s proposals.”
In response to Landa and Cheshin’s paper, Teva in a statement praised Slonim’s qualifications and said his re-election will “serve Teva and its shareholders well.” The company also said that the attack on the insurance policy “lacks a basis in fact”.
The company pointed out that since the start of the year, Teva’s stock had delivered a 35.8 percent total shareholder return versus 8.0 percent for the S&P 500, using the U.S. stock index as an example although Teva is not listed on it.
Israel’s blue-chip share index has risen 5 percent this year.
Landa, however, pointed out that since Frost took the helm in 2010, the stock is down 10 percent, even with this year’s rally, compared with a 74 percent rise in the S&P 500.
Landa also said he was told by board member Moshe Many, who is leading the search committee for a new chairman, that the board has already decided on vice chairman Elstein.
A spokesman for Teva said there was no decision yet.
“No decision has been made regarding the identity of Teva’s next chairman. A committee led by (board members) Moshe Many and Yossi Nitzani is currently engaged in a selection process,” the spokesman said in a statement to Reuters.
If Elstein is chosen, he would replace Frost, Teva’s largest individual shareholder with a 1.53 percent stake, who said last month he would step down as chairman by the end of this year.
Landa, who sold his digital printing company Indigo to Hewlett-Packard for $830 million in 2002, said there was a chance his public stance could alter that decision and the board could still choose someone with pharmaceutical experience.
“Were it not for the public exposure now and for the proxy fight, I think it would have been a forgone conclusion that the board would simply have appointed one of its own. Hopefully that will now be more difficult for them,” he said. (Additional reporting by Tova Cohen; Editing by Susan Fenton)