Teva Finally Appoints New Chief Executive After Months of Speculation -- 3rd Update
11 September 2017 - 10:42PM
Dow Jones News
By Rory Jones
Teva Pharmaceutical Industries Ltd., the world's biggest seller
of generics medicines, named Kare Schultz as its new chief
executive, choosing an industry veteran to navigate a series of
daunting challenges, from falling drug prices to the company's high
debt.
The appointment of Mr. Schultz, a Dane, ends a monthslong period
during which Teva had no permanent top executive. It recently
shuffled its board and is shedding assets, while coping with new
competitors. Teva shares have been under pressure for months.
The new chief executive joins from Denmark's H. Lundbeck A/S,
where he was president and CEO since May 2015. He has also worked
as chief operating officer of Novo Nordisk A/S, the world's biggest
producer of insulin.
Teva Chairman Sol Barer said the new chief executive has
everything that the firm was looking for in a new leader: Global
pharmaceutical experience, a restructuring background and knowledge
of generic and specialty medicines.
The new chief, only the second non-Israeli to lead the company,
also understands the "cultural framework" of working for a
pharmaceutical companies firm that like Novo Nordisk is also
considered a national champion, Mr. Barer said in an interview with
The Wall Street Journal.
"This is a critical time in Teva's history. We had to make sure
we got the right person," he said.
Mr. Schultz, 56, joins an executive board at Teva that in recent
years has fought over whether the firm should focus on generics
drugs or invest in specialty medicines, as competition has
increased for its main blockbuster drug.
Board members also have clashed over whether the chief executive
should be Israeli or based in Israel.
The new chief executive would review the firm's operations
before articulating a new strategy as soon as possible, Mr. Barer
said. The new CEO would relocate to Israel and be based out of
Teva's Petah Tikva headquarters in a "sign of his commitment" to
the firm, the chairman said.
Some of Teva's previous chief executives have found it hard to
implement changes at the pharma firm amid heavy scrutiny over its
operations by Israeli lawmakers and other local stakeholders,
hampering the growth of the multinational in the eyes of many
investors.
Teva has been searching for a new, permanent CEO since February,
when former boss Erez Vigodman departed the company for undisclosed
reasons amid a steep fall in the firm's share price. Yitzhak
Peterburg has stood in as interim CEO since then.
There has been plenty of speculation about who might take the
reins at Teva, with AstraZeneca PLC CEO Pascal Soriot cited at one
stage as a contender by local media.
Teva's share price rallied on news of Mr. Schultz's appointment,
rising roughly 8% in early trading Monday in Tel Aviv. AstraZeneca
shares rose 2%.
In August, Teva lost about a quarter of its market value in one
day on mounting concerns about the future of the company after it
cut its full-year outlook and slashed its dividend, blaming the
rapid deterioration of the U.S. generic-drug business. Teva took a
$6.1 billion write-down on that unit and posted a quarterly net
loss of $6.04 billion.
The acquisition last year of Allergan PLC's generics
unit--Teva's biggest-ever deal--has left the company with debt of
roughly $35 billion. It is attempting to pay down those borrowings
with asset sales, but has so far found few takers for its
businesses.
At H. Lundbeck, Mr. Schultz was credited with launching a
turnaround that has put the company on track to report record
revenue and earnings. That overhaul included job cuts and the
restructuring of its business, which last year returned the firm to
full-year profit. H. Lundbeck shares fell 11% following news of Mr.
Schultz's move to Teva.
The Dane has signed an employment agreement for a term of five
years and will receive an annual base salary of $2 million, Teva
said. He will also get paid about $8.8 million every year in
performance-linked bonus and equity incentives, Teva added.
In addition, Mr. Schultz will receive sign-on equity awards of
roughly $40 million, depending on the performance of the firm, paid
over a five-year period, the company said.
Investors had expected Teva to have to pay up for a new chief
executive. Former head Mr. Vigodman received $5.3 million in salary
and equity shares last year, company filings show. That figure was
less than half what CEOs of S&P 500-listed health-care
companies received on average.
Teva didn't give a date for when Mr. Schultz will join the
company.
--Ian Walker contributed to this article
Write to Rory Jones at rory.jones@wsj.com
(END) Dow Jones Newswires
September 11, 2017 08:27 ET (12:27 GMT)
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