Vivus, top shareholder continue debate on board

MOUNTAIN VIEW, Calif. (AP) -- Vivus Inc. and its largest shareholder continued their public dispute over control of the company Wednesday, with both sides airing proposals they said were rejected in negotiations.

The obesity drug maker said it offered First Manhattan Co., which owns a 9.9 percent stake, equal representation on its board if it would drop its fight for more control of the company.

The investment firm has been vying to replace Vivus' board since March, and earlier this month added a demand for a new CEO.

Under Vivus' latest proposal, both the company and First Manhattan would get four representatives on the board. In addition, an independent investor representative would be appointed.

The four Vivus nominees would include the four most recently appointed directors, while the four First Manhattan nominees would include the three recently recommended by a major proxy advisory firm and a new CEO.

In addition, Vivus' current CEO, Leland Wilson, would resign from the board and then retire as CEO when a new leader was appointed. Wilson also would serve as an adviser to help with the transition to new leadership.

Wilson said in a statement early Wednesday that the offer is "extremely fair and balanced" and that the company is disappointed with First Manhattan's rejection of it. He urged shareholders to vote for the company's nominees at its annual meeting.

First Manhattan released a statement in response, saying that it's offered to include five Vivus nominees, including Wilson, on a reformed board, which would give the parties equal representation.

But it maintained the company keeps insisting on a board controlled by its current directors and won't commit to hiring First Manhattan's proposed new CEO Anthony Zook. As a result, until the new CEO is hired, the board under the company's proposal would actually include four incumbent board members, three First Manhattan nominees and the independent investor representative, allowing the company to keep control.

News of the counteroffers came after First Manhattan said Tuesday that it's suing Vivus for pushing back the shareholder vote, which was originally set for Monday, by three days. The investment firm claims it was in a position to win the vote before the delay.

The suit aims to stop Vivus and its representatives from soliciting proxies or votes for the company's annual shareholder meeting. First Manhattan also wants Delaware's Court of Chancery to certify disputed results of the election of Vivus' directors and to stop the company's current directors from taking any further action on behalf of Vivus.

The dispute began in March, when First Manhattan moved to replace Vivus' entire board of directors, stating that the launch of Vivus' weight loss drug Qsymia was unsuccessful and the company needed new and independent leadership. It also sought expand the board to nine directors from six.

Last month, First Manhattan reached out to shareholders seeking support for its slate. And earlier this month, it said it would name Zook, the former president of MedImmune, as Vivus' CEO if it gains control of the company.

Wilson has been CEO of Vivus since 1991.

Vivus shares rose 32 cents, or 2.2 percent, to $14.72 in afternoon trading.