- Depomed Inc. named a replacement CEO and two new board members on Tuesday in a move that should close a months-long feud between the company and one of its largest shareholders.
- Arthur Higgins, a senior advisor at asset management firm Blackstone Group and former head of Bayer HealthCare, will fill Depomed's top spot — left by James Schoeneck, who resigned March 28. The switch was part of a deal with Starboard Value LP, an activist investor that launched a campaign against Depomed's board of directors in September.
- Higgins will also serve as one of the nine members on Depomed's board. William McKee, the former chief financial officer at Barr Pharmaceuticals, and Gavin Molinelli, a partner at Starboard, are also slated to join the board. They are taking the seats of Samuel Saks and David Zenoff, who resigned on March 28 as well.
The majority of the drugmaker's leadership now comes with Starboard's stamp of approval. In addition to Higgins, McKee and Molinelli, an agreement inked back in October created three new empty seats on Depomed's board that Starboard was allowed to fill. The activist investor selected James Fogarty, Robert Savage and James Tyree for those positions.
Depomed's current board is rounded out by Karen Dawes, Louis Lavigne, Jr., and Peter Staple — the only three members remaining since Starboard launched its campaign last year.
At the time, Starboard wanted a complete reshuffling of the board. The investor had lost faith in company leadership, and pointed to a potential $1.75 billion buyout from Horizon Pharma in 2015 that was allowed to fizzle as a prime example of that.
"We continue to have significant concerns that Depomed’s board is not looking out for the best interests of shareholders," Starboard said in a Sept. 19 letter to the company's shareholders. "This was first evident during [Horizon Pharma's] attempt to acquire the company and was then reaffirmed by the board’s stealthy attempt to strip certain important shareholder rights earlier this year under the guise of a Delaware reincorporation proposal."
"We have been steadfast that in light of these egregious actions, the company clearly needs a new board to ensure that shareholders’ rights are properly and fully represented," the letter added.
Starboard held 9.8% of Depomed's outstanding shares at the time, and rallied enough support from other large shareholders to call for a special meeting. The drugmaker, in response, agreed to adding three board seats in October in exchange for Starboard stopping the meeting.
With the addition of this most recent deal, Depomed has likely quelled Starboard's problems with company leadership, at least for now.
"We have an opportunity to accelerate Depomed’s journey as a leader in pain management and neurology as we maximize value for all shareholders,” Higgins said in a March 28 statement.