Pleasanton-based Veeva Systems completed a groundbreaking corporate amendment to formally align its values and its corporate structure earlier this month.
Previously the software company was incorporated in Delaware and its formal duty was limited to maximizing shareholder value. CEO and founder Peter Gassner asked Josh Faddis, the corporate counsel, to check into a way to realign how they run the company with its incorporation papers. That was back in 2014 and started a process that shareholders ratified with a 99% approval for Veeva to become a Public Benefit Corporation.
This designation formally allows Gassner and other board members and officers to balance the interests of varied stakeholders—employees, customers, shareholders, partners and communities—as it makes decisions about Veeva.
It’s notable that the company, which went public in 2013, is the first publically traded firm to take this step. It has a market cap up $43.6 billion and is headquartered on Stoneridge Drive in Hacienda Business Park. About 800 people work there out of a total workforce of more than 4,000 people. The pandemic shutdown was new for many headquarters staff, but about half of the employees (sales and field service) already were working remotely because of their assignments.
Faddis explained that neither he nor Gassner had heard of the relatively new public benefit corporation designation when he was asked to look into a way to align the structure with the company’s values. When he learned about it that set off a series of conversations with executives and the board that led to the vote this month.
Gassner wrote in his message to shareholders about the special meeting, “As we have grown and as our customer relationships have deepened, we have been increasingly important to the life sciences industry’s ability to improve health and extend life. Looking ahead, Veeva has the potential to become essential to the process of developing medicines and cures and bringing them to patients.”
Gassner, previously a senior executive with both PeopleSoft and Salesforce, was heavily involved with the core platforms for both companies. Veeva is a formal partner with Salesforce on its customer relationship software that is specifically designed for how Big Pharma salespeople engage with doctors. That software launched the company, but its other product, developed in-house in Pleasanton, is designed to support pharmaceutical companies in their drug development, testing, certification and manufacturing. Faddis said Veeva Vault is growing strongly and likely will be the firm’s signature product in the years ahead. Veeva’s customers range from the giant multi-national pharma companies to small, private firms in the life sciences sector.
Both he and Gassner believe that the new designation aligns with the core mission of their customers and will allow Veeva to continue to recruit and retain quality employees. In contrast to many tech companies, Veeva doesn’t require non-compete agreements for employees.
Before announcing the proxy vote, Veeva contacted its 20 largest shareholders—many institutional investors—and ran the switch by them. They obviously liked it—99% in favor with an 82% turnout speaks to both the support and the interest in the change. The irony of the vote is that the board and shareholders had to agree that broadening the critical considerations beyond just financial was in the long term interests of the shareholders.
Faddis thought the overwhelming support may encourage other public companies that are run with similar values to consider the public benefit designation.
