Summary
Genzyme Corporation is the world’s biggest manufacturer of medicines for extraordinary genetic diseases. The firm was involved in a proxy battle with its chief shareholder Mr. Carl Icahn. He stated that the company would not be disposed of as speculated in certain media. The Chief Executive Officer of the company made this revelation during an interview. The company is situated in Cambridge Massachusetts. It had experienced a significant reduction in its turnover owing to a manufacturing fault to be precise the pollution of its Allston landing plant in Boston by a virus. The firm set on a proxy fight with its biggest shareholder. The firm was compelled to part with one hundred and seventy-five million dollars for the breach that occurred at the Allston landing plant. This amount of money was paid to the United States of America, Food and Drug Administration. In addition, it was to be supervised for 5 years after rectifying the faults.
This mess resulted since its Allston facility was stressed as a result of adding Myozyme to the medicines that were being manufactured previously. Myozyme cures Pompe’s illness. The Chief Executive Officer accepted blame for the mishap and said that he shall persist to be the boss of the company until the manufacturing faults were eliminated. He intends to set up a market for Pompe illness medicine which is called Lumizyme. The CEO, Mr. Termeer stated that would resign from his post in the year two thousand and eleven. He further revealed that the company was in a process of looking for a new person to lead the company and stated that he wishes the next Chief Executive Officer to be an inventor (Lopatto, 2010).
As far as investor displeasure warfare is concerned, the CEO revealed that the firm planned to have a two billion US Dollars share transfer. The chief shareholder of Genzyme canceled his lineup of 4 entrants for the board of the company and voted his shares in favor of the firm during the annual general meeting of the company that was held on date sixteen of last month. Mr. Termeer said that many firms are faced with a supplementary factor of activist financiers and that these financiers desire to perform a responsibility within a company (Lopatto, 2010).
Analysis
A proxy fight is an incident that may result once a company’s shareholders develop resistance to several facets of a firm’s leadership. The shareholders usually focus on executive posts. In this case, Mr. Carl Icahn is a major shareholder of Genzyme Corporation who wanted an overhaul of the management team to be initiated. In normal circumstances, corporate activities convince stakeholders to make use of their proxy votes to have in place new managers of the company. This move is usually caused by several reasons. A proxy vote is defined as that vote by a single person as the certified representative of another. Mr. Icahn is seen as a corporate activist who wanted to line up a list of 4 entrants of the board to vote for the disbandment of the management team at its annual general meeting that was held on the 16th of last month. However, he rescinded this decision and voted his shares in favor of the firm. Stakeholders of a public firm are usually permitted to select a nominee. This agent can thus attend annual shareholder assemblies and cast votes on behalf of that particular shareholder. In this scenario, Mr. Carl Icahn had already appointed 4 nominees to represent him at the annual general meeting of Genzyme Corporation (Klein, 2004).
Conclusions and Recommendations
During a proxy fight, the management makes use of several strategies to make use that it remains in power. In this case, the Chief Executive Officer of Genzyme Corporation uses several strategies to mend the reputation of the company. The company makes a payment of a huge amount of money to the United States Food and Drug Administration for the manufacturing breach. Second, the CEO has promised to make sure that the faults are rectified. Third, the company announced a share buyout to permit management to buy its generic assessment and analytic ingredients ventures. I recommend the company to fulfill the promises that were stated by its CEO so that the manufacturing violations can be rectified and also put in place measures that are aimed at preventing any future manufacturing mishaps (Klein, 2004).
References
Klein, R. (2004). Business Associations: Cases and Materials on Agency, Partnerships, , and Corporations. USA: FoundationPress.
Lopatto, E. (2010, June 14). Genzyme Isn’t for Sale after Icahn Fight, CEO Says. Business Week (Online Edition). Web.