XenoPort Inc. (XNPT) shareholders should “insist on change” at the drugmaker and vote against the incumbent board, activist Clinton Group Inc. urged in a letter today after filing a proxy statement seeking to replace three directors.
“We believe the Board and CEO –- however well-credentialed and great-intentioned they may be -– have made some awful capital allocation decisions with our (and your) money,” Clinton Group said today in letter to other shareholders, a copy of which was obtained by Bloomberg News. “Fifteen years into the life of XenoPort, we believe the company’s owners should exert their rights and insist on change.”
The activist investor is trying win shareholder support for its fight to replace the three board members up for re-election at Santa Clara, California-based XenoPort’s annual meeting in June. Additionally, Clinton Group is seeking an annual vote allowing shareholders to express their approval of all directors’ performance. The proposal would cap annual compensation at $35,000 for any board members who don’t win majority backing.
Led by President Greg Taxin, Clinton Group has since September argued the drugmaker should divert resources away from its marketed product Horizant, for restless-legs syndrome, and toward what the investor sees as a more promising experimental medicine for multiple sclerosis.
XenoPort didn’t immediately respond to a call seeking comment outside of West Coast business hours. XenoPort shares have dropped 37 percent in the year through yesterday. The stock was down 5.4 percent today, to $4.24 as of 10:27 a.m.
Among the three directors up for re-election this year is Chief Executive Officer Ronald Barrett, one of the founders of XenoPort, according to a company filing. Clinton Group has proposed a bylaw ruling that if Barrett doesn’t win re-election to the board, he should be removed from serving as an officer of the company -- an effort to oust him as CEO.
Activist funds generally acquire equity stakes in companies and try to force corporate management and boards to make changes that boost share prices and investor returns.
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