There is nothing like compensation and perks to irritate shareholders. Consider Phillip Frost, who is chairman of Teva Pharmaceuticals and is scheduled to receive a 75 percent increase in salary, which would jump to $900,000 annually, as well as another $700,000 for using his private jet. But there is more,Globes reports shareholders are also being asked to approve an additional $298,000, which would bring his travel expenses in 2011 to $1 million.
The increases are part of a move to boost director salaries by an average of $76,000 a year, to $190,000, plus another $500 for every board meeting, which would actually be unchanged from previous years. The general shareholder meeting is scheduled for next week, but Platinum Investment Portfolio Management ceo Gabi Haber sent a letter to Teva directors, arguing they should not raise their salaries or approve Frost's travel expenses by his private jet, Globes writes.
Haber says if Frost wants to attend Teva board meetings in his private jet, then he should fund the cost himself and not ask shareholders to pay for the flights. "If not then the company could buy him a first class or business class air ticket for about $5,000 as is normal," he tells the newspaper, adding that "Teva has not grown in recent years. On the contrary, the company's market value has fallen. The shareholders are not satisfied with the company's results so there is no reason to raise the directors' salaries."
Teva responded by saying the drugmaker "is asking to update director pay in direct proportion to the rise in activities and global expansion. The recommended level of pay, which is being brought for the shareholders' approval is not different from acceptable levels at global companies with a scale of operations and business revenue similar to those of Teva in the pharmaceuticals industry and in general.
"In contrast to many other global companies, the rate of directors' salaries does not include an additional equity component, and hence the pay awarded to directors is clear, transparent, and agreed in advance, and proportionate in relation to the rate of the company's success, and their efforts to push the company forward," the drugmakers tells Globes.
Haber, however, is unconvinced, even though he appears to be the only such shareholder to lodge a complaint. "We are focused on the investment funds of our clients, while it's possible that the large institutions have different interests to take into account, and for one reason or another don't want to make large waves," he tells Globes. "It's true that in relation to Teva's huge revenue, these additional expenditures of several million dollars won't bring it down, but from a public point of view it is not right."