PHARMACEUTICALS: Elan has defended the decision of its chairman and chief executive, Mr Donal Geaney, to hold on to his dual role in a management restructuring despite criticism from Irish investors.
The embattled drugmaker said the bulk of its shareholders were in the US where the combined role was not an issue and Mr Geaney's role was not expected to change.
"Mr Geaney is not going anywhere," company spokesman Mr Max Gershenoff said yesterday."Elan has, however, announced both corporate restructuring and management changes addressing market concerns."
Many believe that this week's announcements did not go far enough and that fresh faces on the board were the least that was needed. "At the very least he should split the roles of chief executive and chairman and bring in a very well-respected person with a keen pedigree from outside to occupy whichever position he vacates," said one Dublin-based asset manager, who declined to be identified.
Some go even further, arguing that Mr Geaney's position as head of the pharmaceutical group may now be untenable.
"He's probably on borrowed time," said Mr Gregor Smith, fund manager with Aberdeen Asset Management. "When you're so closely associated with this kind of failure, it is difficult to actually persuade people to trust you again."
However, others argue that so much damage has been done to the company that getting rid of Mr Geaney at this stage would do little other than provide some short-term satisfaction to a few disgruntled shareholders.
"They are in a very difficult situation and they have a lot more on their mind now than these issues," said Mr Martin Nolan, chief investment officer with Hibernian Investment Managers, which holds Elan shares.
"They need to focus on what they can do to improve corporate governance and their overall standing in the market and not take it out on one individual."
Strengthening the board, which has more financial than pharmaceutical experience, would be one step in that direction, he said.
Mr Eugene Kiernan, head of asset allocation at Irish Life & Permanent, also believes that Elan faces more serious issues than Mr Geaney's role.
"The bigger issues are probably more about the company itself and its ability to meet the earnings targets they have given the market. In terms of urgency, I think that's further up the agenda."
More than 70 per cent of Elan's shares are held by US investors, with Irish investors accounting for just a small portion of the company's shareholder register.
However, Irish pension fund managers, most of whom had some exposure to Elan because of its heavy weighting in the ISEQ index, have been angered by the collapse in the company's share price since January and management's role in the debacle.
Although the shares recovered some ground in New York yesterday, adding 4 per cent to $7.17 by the Irish close, they are well off their 52-week high of $65.
Irish investors also believe that just because European investors account for a smaller proportion of the company's shareholders, it shouldn't prevent the company from doing what is right.
"Elan is an Irish company and we are very disappointed that, as an Irish company, they have not dealt with corporate governance as they should," said Mr Nolan.
