Smith from Starboard claims that Pfizer threatened to sue renegade executives before the activist schism.

• Pfizer was accused of threatening litigation against two former executives who initially supported Starboard Value's turnaround campaign at the pharmaceutical giant.
• Jeff Smith, a member of Starboard, urged the company to form a special committee to investigate the matter, characterizing it as "unethical."
• Late Wednesday night, former CEO Ian Read and ex-CFO Frank D'Amelio publicly supported Pfizer CEO Albert Bourla, breaking away from the activist's campaign.

Starboard Value's activist accused the pharmaceutical giant's former CEO and CFO of threatening litigation to break ranks with the investor's turnaround campaign.

In a Thursday letter to Pfizer's board, Jeff Smith, the starboard managing member, stated that the company or its advisors threatened to reclaim former CEO Ian Read and ex-CFO Frank D'Amelio's past compensation and cancel their unvested shares.

Smith requested that the board form a special committee to examine the matter, characterizing it as "seriously unethical, a gross violation of fiduciary duties, and highly inappropriate."

The source stated that the fear of legal consequences influenced Read and D'Amelio's endorsement of Pfizer CEO Albert Bourla on Wednesday night.

Starboard's Smith stated that when the activist met with the two executives, they both expressed "concerns" about Pfizer's direction under Bourla and offered to assist Starboard in its turnaround efforts.

Neither Starboard nor a Pfizer spokesperson responded to requests for comment.

Smith confirmed earlier reports that he will meet with Bourla in person next week. The agenda of their discussion is unknown, but sources familiar with Starboard's thinking suggest that Bourla's leadership has negatively impacted Pfizer's focus on disciplined cost structure and M&A.

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