Amgen Inc. shareholders overwhelmingly approved corporate governance reforms at the company's annual meeting last week that should give shareholders more power to approve or reject board members.
The change to the Thousand Oaks-based biotech's certificate of incorporation, which was supported by the current board, shifts the selection of directors from staggered elections of three-year terms to annual elections of a one-year term, starting in 2008.
The board earlier this year also changed its bylaws to require directors to receive a majority vote in uncontested elections. If a board member does not receive the necessary votes, that director must resign. The board can decide whether to accept the resignation.
Annual elections are widely supported in the activist shareholder movement, and in Amgen's case appeared to have gained support as the company's share price has faltered amid rising health concerns over its best-selling anemia drugs.
One day after the May 9 shareholders meeting, a U.S. Food and Drug Administration advisory panel recommended that Amgen and Johnson & Johnson be required to place new restrictions in the prescribing information for their top-selling anemia drugs. The FDA is not required to follow the panel's recommendations but usually does.
The outside advisory panel looked at studies indicating that both Amgen drugs and Procrit (an Epogen equivalent that Amgen provides to J & J;) raised the risk of heart attacks, strokes and death when used at high doses. The drugs are approved for anemia related to chemotherapy and kidney failure, but recently Amgen studies have attempted to justify broader uses.
Aranesp and Epogen accounted for 47 percent, or $6.6 billion, of the company's revenue last year. New restrictions could reduce the company's sales by as much as 17 percent, analysts have speculated.
Following the panel's decision, Amgen shares plunged 9 percent the biggest drop in more than five years to close at $57.33 on May 10.
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