Having fended off shareholder demands for the past year, Enzon Pharmaceuticals has agreed to bend to accommodate an investor movement seeking the separation of the company’s chairman and CEO positions. Institutional investor Dellacamera, which owns approximately 7 percent of Enzon, has for months been lobbying against company chief executive Jeff Buchalter, who critics blame for Enzon’s slumping stock price during his tenure—a 56 percent drop since 2004. Having filed a rare motion in the Delaware Court of Chancery that would have allowed shareholders to remove Buchalter, Dellacamera dropped its suit after Enzon announced the changes to its corporate structure.
Dellacamera representatives were unhappy with the terms of Buchalter’s contract, which, besides stipulating large compensation and severance packages, mandated that the CEO receive a year’s notice prior to being fired, making him almost impossible to squeeze out. Dellacamera’s Delaware case would have sought to amend Enzon’s bylaws so as to allow the removal of its CEO by shareholder vote. Such a end-run of the board has never been sought before.
Though Buchalter will remain the company’s president and chief executive, Enzon has named existing director Dr. Alexander J. Denner as its new chair. Denner, a Carl Icahn ally, is a managing director at several of Icahn’s funds. Also part of Enzon’s agreement was the naming of a new director, Harold J. Levy, an executive at Iridian Asset Management, which itself owns 18 percent of Enzon.
“I look forward to Alex Denner’s and Harold Levy’s contributions in their new roles and appreciate their ongoing confidence in our strategy,” said Buchalter in announcing the changes. “Enzon is well positioned today thanks to the efforts of our management team, employees, and board of directors. I remain committed to leading Enzon through the next steps of its development.”