Bob Bertolini Appointed to Genzyme's Board of Directors

UPDATED -- 12.10.09 @ 10:01 AM EST: The Wall Street Journal is offering this observation on Bertolini's mistake-pocked tenure at old Schering-Plough -- I guess stenography is the word of the day, on this [non-]story:

. . . .Genzyme. . . cited his experience in "transforming" Schering's operations and driving decisions that "turned the company around" to double its sales over four years. . . .

R-i-i-i-i-i-i-i-ght. If "turnaround" is taken to mean "bust-up", in this context, then I guess I agree. One thing is sure -- if Whitworth's Relational Investors wants (per the WSJ) an exit-at-any-cost outcome, Bertolini is their man (as a putatively independent director) -- his Schering CV would point to little else.

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I am surprised by this -- simply because I would have guessed that Mr. Bertolini's non-compete would have prohibited this sort of a board seat -- for at least a year, post his exit from Schering-Plough with what will likely turn out to be over $120 million, all-in, as a result of the reverse merger/bust-up engineered by Merck.

Here a snippet of the story, from the German WeltOnline wire service, but I'll go read his non-compete, and post it below -- in green -- shortly:

. . . .Genzyme Corporation today announced the election of Robert J. Bertolini to the company’s board of directors. Mr. Bertolini was executive vice president and chief financial officer at Schering-Plough. . . .

With many established products and services helping patients in approximately 100 countries, Genzyme is a leader in the effort to develop and apply the most advanced technologies in the life sciences. The company's products and services are focused on rare inherited disorders, kidney disease, orthopaedics, cancer, transplant and immune disease, and diagnostic testing. Genzyme's commitment to innovation continues today with a substantial development program focused on these fields, as well as cardiovascular disease, neurodegenerative diseases, and other areas of unmet medical need. . . .

Now, note how many areas Genzyme is working in -- where Schering-Plough once was -- and New Merck now is. . . . Hmmmm.

LATER: It turns out that Mr. Bertolini, unlike Ms. Cox, and Mr. Kohan, has no formal written "non-compete". When he joined old Schering-Plough in November of 2003, all he agreed to do, in return for the above golden parachute payments, was to avoid disclosing Schering-Plough confidential information to anyone outside the company (except in very limited circumstances not here relevant).

However, this still squarely presents the question of what he would be allowed to discuss in Genzyme board meetings, about his experiences -- and know-how -- in these various markets/disease states. Let's turn to his 2003 employment agreement, then (at page 14 of Exhibit 10(e)(iv) to the 2004 Form 10-K filed with the SEC):

. . . .10. Confidential Information. The Executive shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company or any of its affiliated companies, and their respective businesses, which shall have been obtained by the Executive during the Executive’s employment by the Company or any of its affiliated companies and which shall not be or become public knowledge (other than by acts by the Executive or representatives of the Executive in violation of this Agreement). After termination of the Executive’s employment with the Company, the Executive shall not, without the prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it. In no event shall an asserted violation of the provisions of this Section 10 constitute a basis for deferring or withholding any amounts otherwise payable to the Executive under this Agreement. . . .

Well, at first blush, Mr. Bertolini ought to recuse himself from most of the active discussions of presentations made to the Genzyme board in any of the overlapping markets/disease states -- for the avoidance of doubt.

More likely, though, given that Mr. Bertolini's perhaps $120 million cannot be withheld from him by Merck (see last sentence in green above), he probably will just go ahead and sit through all board meetings, presentations and discussions of the same. And openly discuss all he knows, from his vast experience, in each area. That is clearly a significant reason why Genzyme's other directors agreed to appoint him to their board.

[I guess it is also possible that Merck has given him a consent -- i.e., waived Section 10, altogether, in his favor.] We'll never really know, as no applicable rule or law requires the disclosure of such a post-employment waiver. But if any part of Section 10 has been waived, and I were a Merck stockholder, I might want to know what the $120 million actually bought, for the New Merck stockholders.

One would hope it would at least prevent former CFOs from helping competitors to reach market in Merck's franchise markets -- at least for a period of time. Mr. Bertolini has every right to seek gainful employment, post Schering-Plough -- but I do wonder what justifies all that 'chute loot, if it doesn't protect New Merck stockholders, to any significant degree.

[Ed. Note: Originally posted on December 8, 2009 at 8:57 PM EST -- updated 12.10.09 and just now bumped up to the top, for ironic (moronic?) mainstream press perspective/renewed relevance.]