Dissidents Elect 2 to Amylin Board; So Who Won the War?

The results of the shareholder vote for control of Amylin's board of directors are in: dissident investors Eastbourne Capital and Carl Icahn now have two directors on the board (one each). They had proposed a slate of five for the 12-member board. Two new independent board members that Amylin had recently added to the board also survived.

There are three ways to interpret this:

1. Amylin won! The company's loyal directors still make up 10 of the 12 seats on the board, and thus current management will find itself well-supported. The majority of the Eastbourne/Icahn slate was defeated, giving management another confidence boost. The company's strategy of cutting back on sales and marketing costs ahead of the exenatide once weekly launch is correct, and the company can concentrate on that without worrying about whether it will be sold. Amylin, obviously, prefers this situation:

Today's outcome affirms that shareholders have confidence in the Company's plan to build value in 2009 and beyond, having apparently elected only two of the five dissident nominees.

2. Eastbourne and Icahn won! It is incredibly difficult to win a proxy fight. Even at the worst companies, lousy board members survive against all odds. (There's an excellent piece on this by the New Yorker's James Surowiecki here.) Most shareholders don't even vote. The fact that Eastbourne and Icahn managed to get any directors on the board is a huge blow to the credibility of Amylin's current board and management. The victory should be taken as a final warning from shareholders who are out of patience. This is Eastbourne's interpretation:

We want to thank Amylin shareholders for supporting us in effecting change to the Amylin Board and sending a strong message that the past results are not acceptable. We look forward to working constructively with the new Board of Amylin and doing our part to ensure the long-term success of the Company.

3. Everybody loses! the vote creates the worst of all worlds, a fudge between management and its dissidents. The two sides hate each other. Note that Icahn admitted to the N.Y. Times that he'd had an "angry exchange" with management because he believes they blocked a buyout attempt by Lilly. (Interestingly, Lilly CEO John Lechleiter says he doesn't want to buy the company -- so somebody isn't telling the truth!) With the rift between them they cannot possibly work together, thus increasing the rancor at the company.

In truth, Amylin CEO Dan Bradbury will likely be feeling somewhat chastened by the result. He now has to run his company knowing that there are two spies inside his camp feeding progress reports to his enemies, and he can do nothing about it. When he meets the board, it will no longer be the cheerleader sleepaway camp he has been used to. Expect the company to become a tighter, leaner ship over time.

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