Boston-based private equity fund Wellington Management Company LLP has become a party at interest in Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA), with a 6.1% stake, according to the company's expanded financial report for 2012, published yesterday. Wellington Management is the largest institutional investor in Teva, in which no shareholder owns more than 5%. Wellington Management's stake is currently worth $2.17 billion.
Teva chairman Dr. Phillip Frost owns 1.54% of the company's shares, worth $545 million. Last year, Teva's general shareholders meeting approved a pay hike and reimbursement of travel expenses in 2011 for a total of $1.9 million. Teva also rents an office in Miami from a Frost-owned company for $412,000 a year. Rent will rise by 4% a year through 2015.
The aggregate salary cost of five executives who left Teva last year (including former CEO Shlomo Yanai) was $14.7 million, and they also exercised options and vested shares at a profit of $1.8 million. Current executives exercised options and vested shares at a profit of $4 million.
Teva's share price fell 11% in 2012, and was traded at an average share price of $41.10. The drop in the share price resulted in only 704,000 options being exercised by employees during the year - 70% fewer than in 2011 and 90% fewer than in 2010. The average strike price in 2012 was $33.36, resulting in a benefit of $5.5 million, down from $34 million in 2011.
The fall in Teva's share price means that 3.2 million options have a strike price higher than the current share price, effectively wiping them out. During the year, Teva allotted 7.2 million options at an average strike price of $40.50, 4% higher than yesterday's closing price on the NYSE of $38.94. Teva employees held 36.6 million options at the end of 2012.
The drop in the share price also affected Teva's share buybacks last year. The average buyback price fell from $44.60 per share in February to $36.60 in December. Altogether, the company bought back 28.1 million shares for $1.17 billion.
Teva had 45,948 employees worldwide at the end of 2012, 16% of whom were in Israel. The number of Israeli employees increased by 4% last year. The company's Kfar Saba facility had 1,021 employees, making it Teva's fifth largest facility by manpower, after the facilities in Germany, Japan, the Czech Republic, and Hungary.
The financial report also states that Teva's inventory rose 10% to $5.5 billion at the end of 2012 from $5 billion a year earlier. The company said that it has improved its inventory control, and has moderated this growth.
Published by Globes [online], Israel business news - www.globes-online.com - on February 13, 2013
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