Eli Lilly and Co. shareholders this morning rebuffed an effort by California Public Employees' Retirement System, the nation's largest public pension fund, and four major proxy advisory services to force two directors off the board and prevent the new CEO, John Lechleiter, from joining the board.
Dr. Alfred Gilman and Karen Horn were reelected, according to Chairman Sidney Taurel. Lechleiter was elected to the board for the first time since he became CEO on April 1.
Vote figures will be revealed later.
The fund contended that the existing directors and Lechleiter presided over lackluster stock performance in recent years.
The annual meeting came as Lilly announced improved first-quarter results.
Still, investors responded negatively to the earnings, sending the company's shares down as much as 4 percent in morning trading.
The Indianapolis-based drugmaker earned 97 cents per diluted share in the three months ended March 31. But a favorable tax ruling by the Internal Revenue Service helped those totals. Excluding that gain and charges for recent acquisitions, Lilly would have earned 92 cents per share.
Analysts were expecting earnings of 96 cents, excluding extraordinary items, according to a survey by Thomson Financial. In the same quarter a year ago, Lilly earned 47 cents per diluted share.
Lilly also took a larger-than-expected charge to wind down its inhaled insulin program. The company announced in March that it would discontinue that program, which accounted for most of a $145.7 million restructuring charge Lilly recorded in the first quarter.
Lilly's sales surged 12 percent, to $4.81 billion, in the quarter. But again, analysts expected more. Their average prediction called for $4.83 billion.
Lilly's sales growth was fueled most by the antidepressant Cymbalta and the anti-impotence pill Cialis. Those two drugs grew 37 percent and 74 percent, respectively.
But half of Lilly's overall sales growth came from the benefit of foreign exchange rates and price increases.
"Following strong performance in 2007, Lilly continued to deliver solid financial results in the first quarter of 2008," Lilly CEO John Lechleiter, said in a statement.
Lilly shares late this morning were trading at $49.80, down $2.27 on the day.