Genzyme Adds Whitworth to Board, Agrees to Add One More Director to Activist’s Liking
Genzyme (NASDAQ: GENZ]), the Cambridge, MA-based biotech giant, said today it has added Ralph Whitworth of Relational Investors in San Diego to its board, confirming a report from last night by the Wall Street Journal.
Whitworth, who oversees a $6 billion fund that is one of Genzyme’s largest shareholders, will now have inside access to push for change at Genzyme. He will chair a new Genzyme board committee on strategic planning and capital spending, and he will join committees on compensation and nominating and governance, which are responsible for CEO pay and CEO succession, Genzyme said. The company also agreed to nominate one more independent director with “substantial expertise” in the biotech industry, with the consent of Whitworth, Genzyme said. In return, Whitworth has agreed to support the company’s proposals and director nominees at the annual meeting scheduled for June 16, Genzyme said. The company’s board has now grown to 10 members with the addition of Whitworth. He will stand for election again at the annual meeting, along with all nine other directors.
“I am looking forward to working with the board to further our agenda for creating shareholder value at Genzyme,” Whitworth said in a company statement. “As long-term shareholders, we believe the company has great potential.”
This new deal with Whitworth is an update to a “mutual cooperation” agreement he reached with Genzyme back in January. Under that deal, Whitworth agreed to support the biotech’s slate of directors at the 2010 annual meeting on June 16, but if the company’s choices didn’t meet with Whitworth’s approval, Genzyme said it would name him to the board this fall. Whitworth shared his goals for changing things at Genzyme in this interview in January with Xconomy San Diego editor Bruce Bigelow.
The move to add Whitworth and one more director could make the going tougher for another activist investor, billionaire Carl Icahn, to exert his own influence over the direction of Genzyme. Icahn nominated four candidates to the Genzyme board back in February, including himself. The shareholder angst stems in large part from manufacturing troubles that hit Genzyme last June, which eroded sales of its big-selling enzyme replacement therapies imiglucerase (Cerezyme) and agalsidase (Fabrazyme). Genzyme’s stock fell 26 percent in 2009.