Elan board's use of private jets criticised

THE BOARD of Elan has been criticised by some large shareholders over its dispersed management and use of corporate jets.

The biotech company is spread across three continents, and its management is equally far-flung.

Elan chief executive Kelly Martin is based in a small office in New York. Its chief financial officer is based in Ireland, research and corporate communications functions are based in San Francisco, and its general counsel is in Pennsylvania.

The company also has offices in Boston and the state of Georgia in the US, and in Tokyo.

"It's strange to see this much dislocation of management," said Damien Conover, an analyst at Morningstar, echoing a view shared by some investors who question whether the company's structure lends itself to nimble, responsive action.

"What I would like to see is the CEO based in one of the company's headquarters, either in Ireland or in San Francisco," said Matt Strobeck, partner at Westfield Capital Management Company, which has $9 billion (€6.9 billion) under management and holds 19.7 million Elan shares.

One bugbear is the company's use of private jets courtesy of a contract with NetJets.

"I'm very disappointed these guys are flying around in private jets," said Mr Strobeck. "The company's science is terrific, but this diverts much-needed cash from research and development."

For a company not making a profit, any private jet use sends the wrong signal, said Mr Conover.

"For a company where cash is of concern, it would not seem as though private jet use was the best use of resources."

It is not just private jet use that bothers those concerned about Elan's board oversight.

They also point to Mr Martin's role as director of Irish hedge fund Kinsale Capital Management. - (Reuters)