SEOUL, South Korea,
May 20, 2024 /PRNewswire/ --
Fellow Aurinia Shareholders,
ILJIN SNT Co., Ltd. and its affiliates (collectively, "ILJIN")
is a long-term holder of more than 5% of Aurinia Pharmaceuticals
Inc. ("Aurinia" or the "Company") and has been supportive of the
Company's mission since 2010 when we invested in the predecessor
company, Isotechnika. As one of the largest and longest-standing
shareholders, we have had the privilege of supporting the Company
through its drug development efforts and subsequent FDA approval
of LUPKYNIS. We have also supported the CEO, Mr. Peter Greenleaf, having voted in prior years for
his re-election to the Board.
Like other shareholders, we have been greatly shocked and
dismayed to see the share price plummet since the Company's
announcement on February 15, 2024 of
FY 2023 operational results and the unsuccessful conclusion of its
7-month long strategic review process.
The Company recently announced its Q1 2024 operational results.
While the Q1 2024 financials showed some improvement, there has
been no sign of share price recovery despite the Q1 performance
improvement. If anything, the stock performance following the
recent earnings report has reinforced the market perception that
there remain substantial uncertainties surrounding the Company's
new corporate strategy (focused on commercial execution
of LUPKYNIS) announced in February. We believe that if we
choose to ignore and do not respond to these alarming developments,
we may only see our shareholder value further eroding going
forward.
In response to these concerning developments, we wrote to
management and the Board of the Company in March, and have voiced
our concerns and requested changes to the management and also the
Board's role as the supervisor of management's performance.
However, we only received inadequate responses from the Company
reciting its prior statements.
As one of the long-standing shareholders, we now believe it is
imperative to demand management's accountability, in order to put
the Company back on track. If the Company does not change paths
despite the massive losses shareholders have suffered during the
past several months, it would only mean that there is no alignment
of interests between company management and shareholders, and that
it is time to establish a system within the Company to enforce
management's accountability.
It is simply not right that while shareholders are suffering
major losses, those same executives and Board members responsible
for such losses continue to collect hefty amounts of compensation
-- including substantial amounts of free RSUs -- from the Company
as if nothing had happened. In our view, the only way we can
enforce accountability is to make our Board an independent board,
and what this means is that the Board composition must be changed,
so that the Board may effectively act as a check and balance to
Company management.
For these reasons, Mr. Greenleaf should no longer serve on the
Board and should only serve as the CEO going forward. As the
Company's CEO, Mr. Greenleaf will be able to continue to implement
his new corporate strategy (focused on commercial execution)
announced in February, while the Board without Mr. Greenleaf's
participation will be able to discuss and determine the validity of
the new corporate strategy independently and evaluate management's
performance objectively.
In addition, given the Company's continued poor performance and
its single-minded focus on LUPKYNIS (by foregoing all other growth
options such as AUR 200 and AUR 300), it is important and necessary
that the Board's size be kept to a bare minimum and no new board
member should be allowed until after the Company has showed a clear
sign of a turnaround.
In view of the foregoing, ILJIN's intends to vote as follows at
the Company's upcoming annual meeting:
- As explained above, Peter Greenleaf should no longer serve
on the Board and should serve only as the Company's CEO going
forward. Although we have previously supported Mr.
Greenleaf's board membership, it has become patently clear that his
influence over the Board's composition and operation is so
significant and prominent that the Board cannot serve its critical
role of providing independent oversight of management. While
we believe the ultimate responsibility for poor management
performance and destruction of shareholder value lies with Mr.
Greenleaf, the Board has not and is not willing to hold Mr.
Greenleaf accountable for all those management mishaps. ILJIN
intends to vote "withhold" on the re-election of Peter Greenleaf to the Board.
- In response to its letter to management and the Board in
March, ILJIN has received a reply letter from the Board
chairman, Daniel Billen. Based
on his reply, Mr. Billen appears unable or unwilling to exercise
any meaningful oversight over management's performance. So,
in our view, Mr. Billen is unqualified to operate the Board as an
independent board, and so should no longer serve on the Board.
ILJIN intends to vote "withhold" on the re-election of Daniel Billen to the Board.
- In September 2023, the Company
agreed to add yet another member to an already-excessive Board,
and ILJIN believes Dr. Robert
Foster should not be elected to a full term on the
Board. Given the Company's revised business strategy to focus
solely on commercial execution of LUPKYNIS, ILJIN believes Dr.
Foster clearly cannot add any new value to the Company's
management. ILJIN intends to vote "withhold" on the election of Dr.
Robert Foster to the Board.
- In light of the dire performance of the Company's share price,
the management compensation plan must be rejected. Following a
dismal 38.6% say-on-pay vote in 2023, rather than reforming
management compensation to align with stockholder interests, the
Board has proposed a management compensation plan that is divorced
from the Company's performance metrics, and ILJIN believes
options and RSUs must not be freely granted regardless of the
Company's performance -- particularly when shareholder value is
utterly shattered. ILJIN believes the fact that such a
management compensation plan is proposed in these dire times shows
that the current Board is not performing its fiduciary duties
properly and only interested in enriching corporate executives and
Board members at the expense of further shareholder dilution. ILJIN
intends to vote "against" the advisory resolution on executive
compensation and "against" the amendment to the Company's equity
incentive plan.
- We echo the recent message from other shareholders, such as
Lucien Selce, that the Board is severely bloated and
excessively compensated. So, we agree that the Board must be
downsized, and each shareholder should determine which Board
members it will be voting to withhold against at this time to keep
the Board to a bare minimum. While we clearly see several
additional Board members having no fit for the Company's revised
business strategy, we do not believe it is appropriate for us to
specify those individual Board members here.
ILJIN believes that the changes above are necessary to
strengthen the Board's role as a supervisor of management's
performance and to enforce management accountability going forward,
and respectfully request other shareholders' support for the
changes.
Sincerely,
KH Sung
CEO of ILJIN SNT Co., Ltd.
Media contact: Yoonwha Lee, yoonhwa.lee@iljin.co.kr
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