Alkermes governance among worst that Sarissa has seen
Alkermes’s board appears to be manipulated by CEO who has destroyed shareholder value for years
Independent directors appear to give nominating and governance only lip service
Sarissa Capital Management LP (“Sarissa”) today made the following statement regarding Alkermes plc (NASDAQ: ALKS):
Sarissa is disappointed that our discussions with Richard Pops, CEO of Alkermes, regarding the nominations of directors was abruptly ended by the company’s sudden announcement of its slate of nominees for the upcoming annual meeting. We were shocked that this occurred because no independent director has reached out or talked to us. This behavior represents some of the worst corporate governance that we have seen in our many years of advocacy for sound corporate governance and for companies to be run in the interests of shareholders.
Pops has presided over tremendous shareholder value destruction since becoming CEO of Alkermes over thirty years ago. Notably, in the last five years (2017-2021), despite growing revenues and having revenues over $1 billion, Alkermes has consistently operated at a net loss. During the same period, Alkermes has underperformed the IBB by approximately 130%1.
Despite the company’s history of poor performance under Pops, the board in its oversight role appears not to take its independence and fiduciary duties seriously. Despite Sarissa being one of Alkermes’ largest shareholders and our history of shareholder value creation, the governance committee made no effort at all to speak with us or our candidates.
The independent directors' recommendation of a board slate for election should take into account the views of shareholders. Accordingly, governance committees generally feel they have a duty to understand why a shareholder wants to nominate directors and at least speak to those candidates.
At Sarissa, we have nominated directors to many companies, and we cannot think of any instance in which independent directors did not speak directly with us. We believe it is possible the entire process at Alkermes was controlled by Pops who manipulated the rest of the board members. Independent directors should run the nomination process and determine the board slate.
As Alkermes and shareholders are aware, we have a proven track record of creating shareholder value. We will not stand by to witness this offense on corporate governance, the egregious neglect of shareholder interests and Pops destroying further shareholder value.
1 Estimated by subtracting the percentage change of Alkermes’ share price from the percentage change of IBB price from 12/30/16 to 12/30/21