Phillip Frost, chairman of the board of directors of Teva Pharmaceutical Industries Ltd. since March 2010, may retire before the end of the year if a suitable successor can be found. Frost's term ends next year, but the 77-year-old has said that he may want to retire earlier than that.
Frost led Teva's move into the area of neurology and respiratory treatments. He became a millionaire from the sale of Key Pharmaceuticals Inc. to Schering-Plough Corp. for $825 million, after an investment of $50,000 fourteen years earlier.
Teva has been going through a difficult time because of boardroom conflicts, dropping share prices, and the coming expiry of the patents on its best-selling multiple sclerosis drug Copaxone. The appointment of board member Erez Vigodman as CEO to replace departing Jeremy Levin was recently announced and gave a boost to share prices.
Investors are requesting that the board of directors be reduced by three or four members from the current 16. Now is an appropriate time for changes, especially as the terms of several members are due to end this year. Benny Landa, one of the investors, is urging that veterans of the pharmaceutical industry are appointed as directors. Landa is also requesting that the board modify the voting rules to enable future changes to be made more easily. The board has been criticized for increasing compensation to directors, including giving a 74% rise to Frost and paying the expenses of his private plane. Vigodman is expected to cut costs.
A Corporate Governance and Nominating Committee has been established that will decide on how to change the board of directors. The big question at the moment is who will replace Frost as chairman when he retires. One possible candidate is one of the directors, Dan Propper, who was CEO of Osem Investments Ltd. for 25 years and was president of the Manufacturers Association of Israel for six years.