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Amgen CEO faces angry shareholders

Times Staff Writer

The beleaguered chief executive of biotech giant Amgen Inc. confronted an often testy group of shareholders Wednesday, his first annual meeting with investors since the company’s fortunes took a hard turn last summer.

“Last year was awful. I deeply, deeply regret that,” Kevin Sharer said, appearing calm and confident during an hourlong presentation to an audience of several hundred at the Four Seasons Hotel in Westlake Village.

He also sought to reassure investors. Sharer said the company was off to a good start this year and suggested that many of Amgen’s woes should be viewed along with problems affecting all drug companies. “I’m not making any excuses . . . but things are pretty stormy out there right now.”

Some shareholders appeared unconvinced and the meeting turned contentious when investors were invited to make public comments.

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One suggested the company begin paying shareholders a dividend to make up for the stock’s steep fall over the last year. Another said she was disgusted with Amgen’s recent performance and was considering selling her shares. “You say you are looking out for the best interest of shareholders. I don’t believe you are,” she told Sharer.

Several questions focused on the chief executive’s nearly $13.2-million compensation last year, which included a car and driver and personal use of the company’s plane.

In all, his pay was nearly 29% less than his 2006 compensation.

Theodore Goldberg, a 73-year-old retired Los Angeles accountant, said he believed the board should consider changing Amgen’s management in light of its poor financial performance and Sharer’s compensation.

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“The board has a fiduciary duty to protect stockholders,” Goldberg said before receiving loud applause.

Sharer said he was prepared for the scrutiny. “This is a democracy and I anticipated hard questions,” he said to one questioner. “I regret what has happened this past year, and I understand” your anger.

Sharer noted that his most recent annual compensation package was reduced from the year before and the value of his Amgen holdings fell as well. “I felt real economic pain.”

He defended his and other senior executives’ use of corporate planes and cars as a necessity for senior management.

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Until last year, the Thousand Oaks biotech pioneer could do little wrong throughout its 25-year history.

Sharer has been Amgen’s chief executive since 2000; he has been chairman of the board of directors since 2001.

Now, the company is increasingly at risk of losing its place atop the spectacularly lucrative but equally treacherous biotech industry.

Studies have suggested that the company’s lucrative anemia drugs, Aranesp and Epogen, can increase tumor growth in some cancer patients, especially at higher doses.

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The medications accounted for more than half the company’s profit in recent years.

In the last year, federal health officials have imposed labeling and reimbursement restrictions on the anemia drugs, and their sales and the company’s stock have sunk. Aranesp sales fell nearly 20% last year to $3.2 billion, according to healthcare research firm IMS Health Inc.

Last month, the company reported a modest first-quarter profit on revenue of $3.6 billion, largely as a result of cost-cutting.

Amgen shares closed Wednesday at $42.20, down 80 cents, or 1.9%. That is 30% less than the company’s 52-week high.

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Shareholders also rejected Wednesday an investor proposal for the company to improve its handling of animals in research testing.

Outside the hotel, members of People for the Ethical Treatment of Animals crouched in makeshift cages with a sign that read, “Amgen tortures animals.”

Inside, PETA member Bruce Wieland said mistreatment of animal test subjects could taint laboratory results and damage Amgen’s image. The proposal received support from less than 10% of shareholders and was voted down.

After the meeting, some investors said they remained confident in Amgen’s management and were taking a wait-and-see approach.

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“I really think they are a good company,” said Mary Gow, an 86-year-old investor from Camarillo. “The stock has gone up, then gone down. But I am going to stick with it.”

Goldberg, the Los Angeles investor, said afterward that he was considering selling his shares but might wait to see whether the stock recovers soon.

“The problem with selling,” he said with a smile, is “I couldn’t come and yell at these guys anymore.”

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dan.costello@latimes.com


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