Hedge fund Sarissa Capital Management LP on Thursday sought a sharp cut in the compensation of Innoviva Inc's (INVA.O) chief executive, the latest salvo by the activist investor in its proxy fight against the drug company.
Sarissa has nominated three directors to Innoviva's board and criticized the company's cost structure, as well as executive compensation, considering that it only manages drug royalties and does not market or sell any products.
Sarissa, run by billionaire investor Carl Icahn's former healthcare lieutenant, also called for a pay cut for Innoviva's board members.
The fund has a 2.72 percent stake in Innoviva, according to Thomson Reuters data.
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 company has seven board members.
The compensation paid to the company's chief executive, Michael Aguiar, should be reduced to below $500,000 per year, Sarissa said on Thursday. (bit.ly/2okYJoA)
Aguiar's total compensation in 2015 was $3.56 million, according to a regulatory filing. (bit.ly/2mStPH3)
Sarissa also said the compensation paid to Innoviva's board members should be reduced to below $200,000.
In a letter to its shareholders on Wednesday, Innoviva said its strategy was working and that Sarissa had launched an "unnecessary and distracting" proxy fight to replace a near majority of directors.
Sarissa's strategy of "arbitrary, aggressive cost cutting recently occurred – and spectacularly failed – at a similar company Enzon Pharmaceuticals Inc", which was eventually forced to delist, Innoviva said.
Innoviva's annual shareholder meeting is scheduled for April 20.
The company's shares were up 2.3 percent at $13.74 in afternoon trading.
(Reporting by Ankur Banerjee in Bengaluru; Editing by Saumyadeb Chakrabarty, Savio D'Souza and Sriraj Kalluvila)