Friday, May 22, 2009

If Carrie Cox Is Let Go, Shortly After The Reverse-Merger. . . .

I have, as promised, tried to estimate her "all-in" golden parachute payments -- the amounts she'll walk away with, solely in 2009-2010, assuming the merger is closed on the present terms. By my reckoning, she'll likely garner somewhere between $36 million and $44 million. Significantly, her ultimate pay-out will rise by over $1.59 million – for every dollar over $22.91 that Schering-Plough’s common stock rises, in NYSE trading, as of the reverse-merger date. Wow, that's some Air-Hassan mega bar-tip.

My figures are a little fuzzy, because a modest portion of some of her options may not vest until May 2010, due to changes in the option plans adopted in 2008 -- but other than that, I think the range is a fairly good guess. It does also include about $6.7 million of IRS Section 280G tax gross-up payments -- a figure I did not even attempt to estimate for CEO Hassan's calculation (though he will be entitled to it).

Ms. Cox's golden parachute compensation will be dramatically lower than CEO Hassan's, largely because he has three more years (she came onboard in 2003 2005, as did Hassan, but she liquidated 900,000 options in April and May of 2007 -- see my newly revised last paragraph, below, for more on that) -- CEO Hassan never engaged in any "cashless exercises" of his option grants (they all remain unexercised) and he kept his restricted stock grants -- and all of his grants were several multiples larger than hers. Still -- hers is an outsized package, by any measure. Click the image, at right, to see the "Air Hassan" Flight Attendant, full-sized.

. . . .If the Merck transaction were completed at last night's closing NYSE price ($23.68), Ms. Cox would walk away with about $37.4 million. . . .

Finally -- remember that Ms. Cox netted about $11 million (about $29 million in gross proceeds) by exercisng options in April and May of 2007, before the release of the disappointing ENHANCE results. That amount is not in any of the above figures -- but one ought to consider it as part of her "takeover haul" -- at a bare-minimum. And, perhaps, if we were to accept the securities fraud plaintiffs' view -- we should think of the $11 million as truly "ill-gotten gains". Thus, from a recent filing in the In Re Schering-Plough ENHANCE Securitites Litigation (Case No. 08-397, US Dist. Ct., N.J.):

That would push her total range to between $47 million, and $55 million. This all would be comical -- if 16,000 people weren't going to be put out of work in the process.


Anonymous said...

That picture is priceless. Well, maybe not~seems like there is a heavy price for the staff at S/P. Now, I know you have other things on your plate but...what about Hans? Maybe he could be the flight mechanic? Since he was the one fixing the golden eagle.

Condor said...

I actually have something really special in mind for Mr. Becherer. You'll see.

Remember the villian, filled only with sand, in the fist Hellboy movie?

And yes, he is a mechanic -- of sorts. [Hans' personal take -- from the merger -- is small, by comparison to these two.]

Great ideas!

Keep 'em comin'!

[I just added a bit, above, to more forcefully tie her $11 million (in option exercises, and immediate sales, in 2007), to the whole payoff concept.]


Anonymous said...

devilish~~thanks for the entertainment and the serious information. If it wasn't impacting so many hard working people it would almost be a great movie plot.

Condor said...

Okay -- I will reveal three of the leading rough drafts/raw material for what I have in mind, now -- to depict the "Never-Ending, Sand-Filled Compensation Zombie" that was, until Monday just-passed, the Chairman of Schering-Plough's Board Compensation Committee. . . .

I am particularly fond of the third image, in that imagined-tripdych.