Ex-Teva chairman: Layoffs were not done wisely

Meir Heth: It's a shame the layoffs were not accompanied by an announcement of a 10% pay cut for directors and executives.

"The streamlining could have been carried in far wiser and more dignified way," former Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) chairman Prof. Meir Heth (81) told "Globes" in an interview. Heth is a small shareholder and part of Teva's founding core, which owns 10% of the company. "This was a public relations failure. It's a shame that the announcement of the layoffs was not accompanied by an announcement of a 10% pay cut for directors and executives. Had they been smart, they would have done that, and believe me, they could be reduced."

"Globes:" Do you think it reasonable for Teva to pay no taxes at all?

Heth: "No, but that was a conscious choice (by the Israeli government) and is not theft."

Teva sent director Chaim Hurvitz to placate the public.

"And he did not speak wisely. To say that Teva has to make cutbacks in order to pay taxes is not a smart thing to say."

For years, we heard almost nothing about layoffs at Teva

"Teva has fired many employees, especially overseas. There was never a strike; there was mutual respect. Teva established itself as a good place to work for employees and managers, and gave many benefits."

Teva-Tech employees are now on strike.

"This is not a pure strike. The man behind it is the secretary of the Beit She'an workers committee. He wants Teva to be managed by the committee. It's easy to do this now that Teva's image is poor. In the past, when there were threats of a strike, management announced that unless there were negotiations it would close the plant, and it's hard to close such a plant in which huge amounts were invested. If management surrenders now, it will lose its deterrence."

Are you upset that Teva is not as Israeli as it used to be?

"The company has become a multinational. It is run by two American Jews, chairman Phillip Frost and CEO Jeremy Levin. Do you know that Teva never sent Israelis to manage its foreign branches? It knew that Israelis would not understand the market like the locals. In the past, it was very important for Teva to preserve its Israeli character, but that's not happening now."

In response Teva stressed that Levin has Israeli citizenship.

In the past, you fought against Frost.

"Last year, some of the founders and I criticized the directors' exorbitant salaries, but the general shareholders meeting approved them. We felt it unbecoming, that this was a sign of Teva's loss of modesty."

Like financing Frost's private jet.

"Phillip Frost is a millionaire, a very successful businessman, the owner of Opko Health Inc. (NYSE: OPK; TASE: OPK), but he needs poor Teva to finance his cost of his private jet? Let him fly at his own expense, not at Teva's."

Heth is the great-grandson of Moshe Solomon, a scion of the family that founded Assia Chemical Industries, which was merged with Teva. He has served as supervisor of banks, chairman of the Tel Aviv Stock Exchange (TASE), chairman of Psagot Investment House Ltd., and chairman of Teva until 2002, when he was succeeded by the late Eli Hurvitz. He served on Teva's board of directors until 2009. He is currently a professor emeritus, specializing in business and financial law.

Published by Globes [online], Israel business news - www.globes-online.com - on October 24, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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