IBJNews

CALPERS gains allies in Lilly bylaw fight

Norm Heikens
April 17, 2008
Keywords
Back to TopCommentsE-mailPrintBookmark and Share
The California Public Employees' Retirement System, the nation's largest public pension fund, said yesterday it has backing from four major proxy advisory services for a resolution that would require only a simple majority vote of Lilly shareholders to amend the company's bylaws.

Endorsing the giant pension fund's shareholder resolution are Egan-Jones, Glass Lewis, RiskMetrics Group (formerly ISS), and Proxy Governance.

The new support ratchets up pressure on Lilly directors and particularly John Lechleiter, whose promotion from president and chief operating officer to CEO took effect just days ago, on April 1.

CALPERS said in March it would withhold votes for Lechleiter as well as existing directors Dr. Alfred Gilman and Karen Horn at Lilly's annual meeting on Monday to protest the company's lackluster stock performance.

Indiana University corporate governance specialist Dan Dalton said it is the first time he has seen shareholders try to nip a CEO's entry to a board so early in the CEO's tenure.

"This is big," Dalton said. "It is extremely aggressive."

CALPERS reiterated yesterday that it is withholding its vote for Lechleiter, Gilman and Horn because they "provided oversight" while the stock languished and the company retained its "poor governance practices."

CALPERS owns about 4.8 million Lilly shares valued at more than $265 million.

Lilly stock has trended sideways since 2005 largely because few potential blockbuster drugs are in its development pipeline. The shares are trading near $53.

In the past five years, Lilly shares have lagged peers by 22.4 percent and the S&P 500 by 67.7 percent, CALPERS charged.

Lilly has said allowing a majority vote would expose the company to the risk of a few shareholders wanting to make changes that wouldn't benefit the company in the long term.

CALPERS contends the rule retards the stock price.

Dalton noted that Lilly directors are not obligated to follow through on what in affect would be a no-confidence vote in Lechleiter.

Still, if CALPERS were able to garner enough shareholder support for a strong showing at the shareholder meeting, Lilly and Lechleiter would be subjected to an unusual level of humiliation.

On the outside chance Lechleiter's ascent to the board were thwarted, Dalton said it would be a first in his memory.

"I have never heard of a CEO of a company who was not a director of the company," Dalton said. "One wonders what it means for a board of directors not to be represented by its CEO."

Comment at NewsTalk.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
thisissue1-092914.jpg 092914

Subscribe to IBJ
  1. Cramer agrees...says don't buy it and sell it if you own it! Their "pay to play" cost is this issue. As long as they charge customers, they never will attain the critical mass needed to be a successful on company...Jim Cramer quote.

  2. My responses to some of the comments would include the following: 1. Our offer which included the forgiveness of debt (this is an immediate forgiveness and is not "spread over many years")represents debt that due to a reduction of interest rates in the economy arguably represents consideration together with the cash component of our offer that exceeds the $2.1 million apparently offered by another party. 2. The previous $2.1 million cash offer that was turned down by the CRC would have netted the CRC substantially less than $2.1 million. As a result even in hindsight the CRC was wise in turning down that offer. 3. With regard to "concerned Carmelite's" discussion of the previous financing Pedcor gave up $16.5 million in City debt in addition to the conveyance of the garage (appraised at $13 million)in exchange for the $22.5 million cash and debt obligations. The local media never discussed the $16.5 million in debt that we gave up which would show that we gave $29.5 million in value for the $23.5 million. 4.Pedcor would have been much happier if Brian was still operating his Deli and only made this offer as we believe that we can redevelop the building into something that will be better for the City and City Center where both Pedcor the citizens of Carmel have a large investment. Bruce Cordingley, President, Pedcor

  3. I've been looking for news on Corner Bakery, too, but there doesn't seem to be any info out there. I prefer them over Panera and Paradise so can't wait to see where they'll be!

  4. WGN actually is two channels: 1. WGN Chicago, seen only in Chicago (and parts of Canada) - this station is one of the flagship CW affiliates. 2. WGN America - a nationwide cable channel that doesn't carry any CW programming, and doesn't have local affiliates. (In addition, as WGN is owned by Tribune, just like WTTV, WTTK, and WXIN, I can't imagine they would do anything to help WISH.) In Indianapolis, CW programming is already seen on WTTV 4 and WTTK 29, and when CBS takes over those stations' main channels, the CW will move to a sub channel, such as 4.2 or 4.3 and 29.2 or 29.3. TBS is only a cable channel these days and does not affiliate with local stations. WISH could move the MyNetwork affiliation from WNDY 23 to WISH 8, but I am beginning to think they may prefer to put together their own lineup of syndicated programming instead. While much of it would be "reruns" from broadcast or cable, that's pretty much what the MyNetwork does these days anyway. So since WISH has the choice, they may want to customize their lineup by choosing programs that they feel will garner better ratings in this market.

  5. The Pedcor debt is from the CRC paying ~$23M for the Pedcor's parking garage at City Center that is apprased at $13M. Why did we pay over the top money for a private businesses parking? What did we get out of it? Pedcor got free parking for their apartment and business tenants. Pedcor now gets another building for free that taxpayers have ~$3M tied up in. This is NOT a win win for taxpayers. It is just a win for Pedcor who contributes heavily to the Friends of Jim Brainard. The campaign reports are on the Hamilton County website. http://www2.hamiltoncounty.in.gov/publicdocs/Campaign%20Finance%20Images/defaultfiles.asp?ARG1=Campaign Finance Images&ARG2=/Brainard, Jim

ADVERTISEMENT