Bristol Myers CEO, Looks Like You're Fired

Includes: BMY, TEVA
by: Evelyn Rubin

Excerpt from our One Page Annotated Wall Street Journal Summary (receive it by email every morning by signing up here):

Board Members At Bristol-Myers Told to Fire CEO

  • Summary: In response to a federal monitor's recommendation last night, the Bristol Myers (NYSE:BMY) board currently has to choose between firing CEO Peter R. Dolan and the company's general counsel or potentially face charges in connection with an ongoing probe. Yesterday's recommendation results from a deferred prosecution agreement to a $2.5 billion "channel stuffing" scandal in which the company was accused of overloading wholesalers with inventory in order to meet targets. According to an unnamed source, BMY is in violation of the agreement by delaying the entry of generic competition to blockbuster drug Plavix. Mr. Dolan has had trouble with the board recently surrounding the Plavix deal that was rejected by regulators: "The board had become worried that the Plavix debacle, coming on top of a series of other controversies during Mr. Dolan's five-year tenure, had so angered shareholders that it was impairing his ability to lead the company effectively." If fired, this would be the third removal of a CEO of a major US drug company in the last 16 months after Merck (NYSE:MRK) CEO was pushed into early retirement and Pfeizer's (NYSE:PFE) CEO was removed in mid-July. The company is not expected to announce a replacement, as there is no succession plan and nobody at the company with the experience necessary to take over the helm.
  • Comment on related stocks/ETFs: Last month, David Phillips outlined in detail BMY's Plavix headaches. Shlomo Greenberg believes that BMY's woes have created a win-win situation for Teva (NYSE:TEVA). George Gutowski wonders about the timing of BMY's recently reduced guidance.

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