Elan 'dissidents' abandon campaign against board
Published 18/09/2010 | 05:00
THE two 'dissident' members of the Elan board will resign and legal action against them will be shelved under a deal aimed at ending long-running disputes at board level.
Shares in Elan closed down 1.04pc at US$4.77 (€3.65) yesterday after the company announced the changes.
In a statement, Elan said Vaughn Bryson and Jack Schuler would resign from the company's board within 90 days, after they accepted the findings of a report into corporate-governance issues presented to the board by US law firm of McKenna, Long & Aldridge.
Mr Bryson and Mr Schuler joined the rest of Elan's 14-member board in backing the report, before their resignations were announced.
And in what looks like a high-level deal to end feuding at the top of the company, Elan will now suspend the legal action it had taken against the two men in the High Court in Dublin.
That action had been taken to block the pair from initiating their own legal proceeding aimed at investigating some of the same issues that are understood to have been addressed in the McKenna report.
In a move that shocked at least some shareholders, Mr Bryson and Mr Schuler were forced to spend their own money fighting the company's action. That set the scene for the board meeting on Thursday at which their resignations were agreed.
Sources close to the situation suggested the costs and risks of litigation effectively forced the two directors to abandon their efforts to challenge more established board members.
Corporate-governance controversies have been dogging the board and weighing on share prices for months.
Now, Elan will consider voluntarily complying with US domestic reporting standards and adopting a US 'best practices' conflicts policy.
But one shareholder dismissed any suggestion the company's problems related to its adherence to Irish, as opposed to US, corporate-governance standards. The shareholder, who previously expressed concerns about the board's reaction to criticism, said: "Elan is so unusual, its issues are not about being an Irish company."
No date has been set for the departures of Mr Bryson and Mr Schuler from the board.
The company could not say whether they would be replaced or, if they were, whether that would be by co-option or after a shareholder vote. An AGM is scheduled for spring 2011.
Meanwhile, a process in already under way to replace Kyran McLaughlin as chairman of the board. He plans to retire once a replacement has been identified.