Third Point, the hedge fund led by Daniel Loeb that’s the largest shareholder at Baxter (NYSE:BAX), wants a say in selecting the replacement for Robert Parkinson Jr., who last month said he’s stepping down now that the spinout of its Baxalta pharmaceuticals division is complete.
In a letter to Parkinson and lead director Thomas Stallkamp, Loeb said Third Point’s $2 billion exposure in BAX stock ought to translate into a pair of seats on the board. Third Point owns a roughly 10% stake in Baxter, the hedge fund CEO wrote.
“We have an excellent track record of participating on corporate boards and on CEO search committees in particular, as demonstrated by our role in hiring several stellar, high-performing CEOs. We are well-positioned to help select a new CEO, drive strategy, and provide a thoughtful perspective on capital allocation,” Loeb wrote, noting that Third Point had a hand in CEO transitions at Ligand, Yahoo and Sotheby’s. “We believe there are several external candidates with the requisite industry experience, leadership skills, and track record of creating shareholder value who could ably take the reins at Baxter.”
Loeb wrote that Third Point also wants to change Baxter’s corporate governance structure.
“The company’s staggered Board – exacerbated by an odd voting structure that values shareholders individually rather than according to economic interest – is shareholder-unfriendly and archaic,” he wrote. “We believe most shareholders agree with our views and as it turns out, so do you. We are confident that by working together, we will ensure shareholders can elect all directors at the 2016 annual meeting, including our representatives.”
In a statement, Baxter confirmed the discussions with Third Point.
“Baxter maintains open communication with its shareholders and values constructive input toward enhancing value. Baxter has engaged in various discussions with representatives of Third Point and expects to continue a constructive dialogue,” the company said. “Baxter’s Board and management team are committed to enhancing value for all Baxter shareholders. Baxter has a proven track record of taking action to create significant value and will continue to evaluate shareholder input, assess opportunities and make decisions to further achieve this important objective.”
