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By Michael Flaherty
NEW YORK, April 20 Shareholders of Innoviva Inc.
handed a narrow victory to the U.S. respiratory drug
company, according to a person close to the matter, as its fight
against activist hedge fund Sarissa Capital saw several last
minute twists and turns.
Innoviva shareholders supported the company's three director
nominees at the annual meeting, according to the person who has
access to the preliminary voting totals.
Sarissa had nominated three of its own directors, after
months of pressuring changes at the company.
While Innoviva was spared a board shake up, the narrow
victory - even with GSK's support - shows that a significant
portion of its shareholders agreed with Sarissa's complaints.
The hedge fund, which owns a 2.72 percent stake in Innoviva,
had accused the company of spending too much money on executive
pay and board compensation, given that its only function is to
manage the drug royalties it receives from GlaxoSmithKline Plc
In a dramatic turn that played out late until Wednesday
night, the two sides nearly agreed to avoid the vote through a
settlement but the company bowed out of the plan at the last
minute when it became clearer that it may win all three seats
. The person close to the matter said a settlement
would have added two of Sarissa's director nominees to the
Board of director proxy fights that go all the way to a vote
often come down to the support of the large index fund managers
who have until the very last minute before to cast their
Innoviva and Sarissa were not immediately available for
GlaxoSmithKline, which has a 29.3 percent stake in Innoviva,
previously said it voted in support of the company's nominees.
Earlier this month, Innoviva announced plans to undertake a
review of cost and executive compensation structures that it
said could result in "meaningful savings in our core operating
costs that will benefit our financial performance.
Innoviva, which has a market valuation of $1.5 billion as of
Wednesday's close, had 14 employees as of 2016, according to its
annual filing. The annual compensation of CEO Michael Aguiar, a
point of contention the Sarissa highlighted in its campaign, was
$3.56 million in 2015, according to a regulatory filing.
(Reporting by Michael Flaherty; Editing by Chizu Nomiyama,