Glass, Lewis & Co LLC, a leading independent proxy advisory firm, on Tuesday recommended that shareholders of Taro Pharmaceutical Industries Ltd vote against all proposals made by Taro?s board of directors, including election or re-election of all its nominees as directors, in the upcoming annual general meeting of Taro?s shareholders scheduled for December 31.
The Glass, Lewis recommendation was released only three days after similar positions were expressed in a report by Proxy Governance Inc, another leading independent proxy advisory firm, Sun Pharma said in a notice to the exchanges on Tuesday.
Sun Pharma is waging a battle to acquire Israel?s Taro ever since the Taro board terminated a merger deal in May 2008 that was signed with Sun Pharma in 2007. Sun holds 36% stake in Taro. Last week, Sun Pharma had urged Taro shareholders to vote against the resolutions proposed by Taro board at the AGM. Sun Pharma shares were marginally up on the BSE to close at Rs 1,503.55 on Tuesday.
In its report, dated December 21, Glass Lewis cited the Taro board?s failure to file its annual reports for fiscal years 2006, 2007 and 2008 and its twice-restated financial statements for fiscal years 2004 and 2005 as proof that the board is ?unable to fulfill its responsiblities to shareholders.? Referring to the eight incumbent directors up for re-election, Glass, Lewis advised that Taro?s ?shareholders should hold them accountable? for their ?serious disservice to shareholders? by voting against them at the annual meeting, concluding that ?the presence of new directors on the board might provide fresh perspective and a much needed transparency in the operation of the company.?
Glass Lewis identified additional serious corporate governance and disclosure problems by the Taro Board, including lack of disclosure regarding members of board committees and the number of times such committees met. Glass Lewis was ?especially concerned about the lack of disclosure regarding the audit committee,? noting that without such disclosures, it is not possible to ascertain such fundamental issues as the existence of proper oversight of the company?s accounting, financial reporting and internal and external audits, a statement from Sun Pharma said.