ISS Backs Glass Lewis in Supporting SINOVAC’s Current Board, Rejects Former Slate Ahead of Special Meeting
SINOVAC Biotech Ltd. (NASDAQ: SVA), a leading provider of biopharmaceutical products in China, announced that Institutional Shareholder Services Inc. (ISS), one of the most influential independent proxy advisory firms, has joined Glass, Lewis & Co. (Glass Lewis) in recommending shareholders vote against the proposed “Reconstituted Imposter Former Board Slate” at the upcoming Special Meeting of Shareholders.
Both ISS and Glass Lewis are urging investors to vote using the WHITE proxy card to retain the current SINOVAC Board, citing governance reforms, shareholder value creation, and transparency initiatives led by the existing board.
Board Statement: “A Clear Mandate to Restore Shareholder Value”
In response to the endorsement from ISS, the current SINOVAC Board issued a statement expressing appreciation and confidence:
“We are thrilled that both ISS and Glass Lewis have recommended that shareholders vote to KEEP SINOVAC’s current Board. This endorsement confirms what we have consistently stated — that the current Board is acting decisively to restore fairness, rebuild trust, and deliver tangible value to SINOVAC’s rightful shareholders.”
The Board emphasized the contrast between its recent actions and the prolonged governance failures under the so-called “Imposter Former Board,” which it claims prioritized self-interest and failed to protect the interests of common shareholders for over seven years.
ISS Highlights: Board Action vs. Governance Failures
In its detailed report, ISS commended the current Board’s proactive efforts, particularly the declaration of a US$55.00 per share special cash dividend and steps toward restoring stock liquidity and exploring a dual listing on the Stock Exchange of Hong Kong. ISS identified these measures as aligning with shareholder priorities, especially after a prolonged period in which common shareholders were excluded from value distribution.
Superior Governance Under the Current Board
“[T]he [current] board appears to be working to pay SVA shareholders their fair share of dividends, and to resume trading of the company’s shares, which are the two most pressing issues currently facing SVA shareholders.”
Critique of Former Board’s Dividend Record
ISS criticized the former Board for failing to provide dividends to SINOVAC shareholders, despite having approved substantial payouts to minority shareholders of Sinovac Life Sciences (SLS), a subsidiary. This discrepancy, ISS noted, raises questions about fairness and fiduciary responsibility:
“The former board […] presided over transactions that enabled the payment of billions of dollars in dividends to minority shareholders of SLS, all while it told SVA shareholders that it had no plans to pay dividends to them.”
When questioned by ISS, nominees from the former Board failed to justify this inconsistent approach, further undermining their case for re-election.
Abuse of Governance Tools: Poison Pill and Trading Halt
ISS also took aim at the former Board’s use of a poison pill strategy, arguing that it appeared to serve as an entrenchment mechanism rather than a genuine defense of shareholder interests:
“It appears that the former board used the poison pill as an entrenchment mechanism… to overturn the will of a majority of shareholders.”
Additionally, the former Board’s failure to remove the NASDAQ trading halt—a critical issue affecting shareholder liquidity and value—was cited as another mark of ineffective governance.
Imposter Board Accused of Self-Dealing
ISS flagged concerns about potential self-dealing under the former Board, particularly in relation to the appointment of SLS board members who authorized the sale of nearly 41% of SLS at a time when the subsidiary was profitable:
“Shareholders can reasonably question whether the former SVA board acted appropriately in its appointment of SLS board members, who presumably approved the sale…”
The current Board argued that such transactions benefited the Dissenting Investor Group — SAIF, Advantech/Prime Success, and Vivo Capital — rather than common shareholders, thereby warranting further scrutiny.
Shareholder Action at the Special Meeting
The Special Meeting offers shareholders a pivotal moment to determine the future direction of SINOVAC. The Company’s current leadership stresses that the vote is not merely about corporate governance — it is about safeguarding shareholder interests and ensuring transparency in how value is created and distributed.
