• D.C.
  • BXL
  • Lagos
  • Riyadh
  • Beijing
  • SG
  • D.C.
  • BXL
  • Lagos
Semafor Logo
  • Riyadh
  • Beijing
  • SG


Pfizer proxy fight averted as Starboard stands down, for now

Jan 27, 2025, 5:27pm EST
business
Pfizer CEO Albert Bourla at the 2025 World Economic Forum.
Yves Herman/Reuters
PostEmailWhatsapp
Title icon

The News

Activist investor Starboard is backing down in its fight at Pfizer after seeing little chance of winning board seats or rousing enough shareholder pressure to force out its CEO.

A deadline to nominate candidates to Pfizer’s board passed over the weekend without Starboard notifying the company of its intent to do so, according to people familiar with the matter.

The decision ends an ambitious campaign that stumbled out of the gate and failed to capitalize on Pfizer’s underperforming stock price to rally investors to its side. Starboard could still push for changes from the sidelines: The activist and Bourla met earlier in January, on the sidelines of JPMorgan’s Healthcare Conference.

AD

Pfizer shares have fallen about 6% since Starboard first surfaced in October with a roughly 0.6% position in the pharma giant.

Starboard put about $1 billion to work on its Pfizer push and tapped two Pfizer veterans, ex-CEO Ian Read and former CEO Frank D’Amelio to serve as its public face.

The campaign went off the rails almost immediately, after the company learned – via a fat-fingered email from D’Amelio to Bourla himself — that the pair was working with Starboard. The two men backed out three days later via a press release issued by Pfizer’s own bankers. Starboard’s Jeff Smith later said Pfizer had threatened to sue Read and D’Amelio.

CNBC first reported Starboard’s decision to not nominate a slate of directors.

Title icon

Rohan’s view

This was a campaign to replace Bourla, even if Jeff Smith avoided saying so. Pfizer had already done the obvious things to boost the stock price — spinning off lower-growth businesses, cutting costs, promising to start paying a dividend, refreshing its board.

AD

That left replacing the CEO, and it’s really hard to run a replace-the-CEO-campaign when your obvious CEO replacement – here, Read, who ran Pfizer from 2010 to 2019 – drops out.

Key, too, was Bourla’s shoring up his board and institutional investor base. A week after news of Starboard’s stake became public, Pfizer appointed to its board Vanguard’s outgoing CEO, Tim Buckley, whose name carries weight among big institutional investors. The former CEO of State Street is also on Pfizer’s board, so that’s two of the top three institutional shareholders on the planet.

And Bourla was quick to take the pulse of other, long-term investors who counseled a steady-as-she-goes approach, he told my colleague Andrew Edgecliffe-Johnson, as you’ll read below.

AD

Smith has pulled off bigger upsets before, but the odds were stacked against him from the start at Pfizer. Still, there’s no indication that Starboard has sold its stock, given the ongoing engagement between the two sides.

Smith has been known to run multi-year campaigns (he came back two years running at News Corp. and won big at Splunk when it sold to Cisco, more than a year after he suggested it as a takeout target). This chapter may be closed, but Starboard will likely be around the hoop for a while.

Title icon

The View From Albert Bourla

Bourla told Semafor’s Andrew Edgecliffe-Johnson last week that he’d met with Starboard and heard their complaints, most recently at JPMorgan’s healthcare conference in San Francisco earlier this month.

“I listen to all of our shareholders,” Bourla said of Starboard in a Davos interview last week with Semafor’s Andrew Edgecliffe-Johnson. “Clearly, they were more active. That’s why they call them activists…There are many others.”

Their feedback? “We don’t want you, because of the pressure, to do something that will hurt the long term, just to create a small bump now,” Bourla said. “I told them that I will never do it.”

AD
AD