Teva Pharmaceutical Industries chairman Phillip Frost has for the first time responded to attacks on the firm for its planned layoffs and lavish executive salaries and perks.
“It’s amazing that there have been no responses to the announcement about the cutbacks in any other country. Israel is the only country where there have been problems. I don’t understand it. Maybe we could have presented the information better,” Frost conceded in a Globes interview on Monday.
“Teva’s board of directors is the body that decides executive compensation, and has sole discretion on this,” says Frost. “It is very sensitive to employees’ conditions, and I believe that it will do for the employees what has to be done.”
Under pressure from the Histadrut, Teva dropped its plan to fire hundreds of Israeli employees, and agreed instead to reduce payroll through natural attrition by not filling positions of departing employees, Globes said.
Last week, former Teva chairman Meir Heth slammed the company for footing the bill for its chairman’s private jet.
“What has the jet got to do with it? Teva does not finance my jet’s expenses except for fuel, which is a normal and reasonable reimbursement. The jet’s real cost is maintenance, and whenever I fly on Teva’s business, it costs me more,” retorted Frost. “I feel that I’m practically doing my job here on a voluntary basis, because Teva is important to me.”
In 2012, Teva approved reimbursing Frost $700,000 a year for cost of his jet for travel related to the company’s business.
Frost defended the firm against allegations of exorbitant tax breaks.
“I want it to be clear: Teva received tax breaks not just because of its existence in Israel, but because it employed people throughout the country, including in the periphery. In this way, it provided a service for a stronger Israel and received no gift, but what was set in law at the time. Teva has met all its commitments and the state of Israel has met its commitments. Any other company would have received the same thing.”
Teva got a more sympathetic reaction from other quarters outside the company.
“The objective is to build a bigger economy, and Israeli economy with big companies. Business decisions should be driven by business, not regulation. We see Teva dealing with the problems of layoffs, but what can you do? Companies go through cycles, and for a company to stay healthy, it must also fire employees,” said Mellanox Technologies CEO Eyal Waldman at the PwC Israel Kesselman and Kesselman and CFO Forum’s end of tax year conference on Monday.
Referring to pressure from Israeli politicians to minimize the layoffs in consideration of the tax benefits, he said: “I do not think that someone from the outside should come and tell a company, ‘You cannot fire people because you received this or that.’ This does not strengthen the economy, but weakens it. Do not put spokes in the wheels. A place with a business ethic should be created, because investors avoid place like China. If investors realize that Israel has ethics, they will feel more comfortable investing here,” said Waldman.
“The amount of regulation and supervision here, and the amendments make it difficult for companies to know what will happen in 2-3 years. Every company here is regarded as a crook. The world will be smaller, and it will be easier for a company to decide where it will do things. We at Mellanox want to bring people here.”
Meanwhile, Teva CEO Jeremy Levin denied a media report he had threatened to resign because of interference in the firm’s management by the board of directors.