. . .Even though CEO Clark has been with Merck for almost seven times longer-- and, astonishingly, Merck was double Schering-Plough's size, pre-merger. This is the central story of pay excess, at old Schering-Plough -- equity grants, run-amok. See e.g., Hans Becherer [pictured, bottom right].
As a "blunt instrument" measure of how tremendously overpaid Mr. Hassan was, and a yard stick as to just how far "out of market" the legacy Schering-Plough Compensation Committee's processes were, consider this one fact, from the just-SEC-filed New Merck proxy statement:Fred Hassan worked at Schering-Plough for about six-and-a-half years. He still owns about THREE-AND-ONE-HALF TIMES more stock than current CEO Dick Clark -- and Dick Clark's career at Merck spans 38 years (he's been with one unit or another of Merck, or a predeccesor, since 1972).
That is a jaw-slacking disparity, especially when we consider that Merck was twice the size of legacy Schering-Plough, and much more successful during the same period -- by almost every imaginable financial measure.
Here it is, from page 27 of the proxy:
. . . .Richard T. Clark | [adding across] | 1.626 million shares [including units]
Fred Hassan | [adding across] | 5.68 million shares [including units]. . . .
This table does not reflect longer term options -- only those that vest within 90 days, or are already vested. The difference widens appreciably -- and unfavorably -- if the longer term options are added in. I'll do that bit o' math for you, later tonight, or tomorrow. [Done.] Sheesh. Who should we shareholders thank for this? The man depicted at right -- Hans Becherer.
9 comments:
BOHICA
Bend Over, Here It Comes Again.
Good one!
If you mean, Anon., that he did the same thing at AHP and Pharmacia -- I agree.
If you mean that it will happen again, this time at privately-held Bausch & Lomb -- I agree that is also (likely) true.
नमस्ते
Like that? How about this one?
When a farmer breeds a cow they say the bull is servicing the cow.
Now you know what AT&T meant in their ads when they said,
"We've been servicing you for over 50 years!"
http://www.dilbert.com/strips/comic/2009-06-17/?CmtOrder=Rating&CmtDir=DESC
http://www.voidspace.org.uk/gallery/dilbert/html/dilbert_ceo.html
http://www.dilbert.com/strips/comic/2009-02-26/
Loved this one from the UK site.
Gonna run it above, until someone makes me take it down.
नमस्ते
where's the data on comparing SP vs Merck in terms of size. the article makes it sound like merck is 2-3x larger.
Didn't merck have 55K employees and SP 52K?
Sure. Employee base is only one measure of size (I think MRK's employee base was closer to 65,000, BTW).
At September 30, 2008, MRK's Assets were about $48.6 billion.
Same date, SGP's were about $23 billion.
Thus my statement that MRK was "double" the size of SGP, pre-merger.
Assets are a very traditional measure of an operation's scale.
नमस्ते
Oh -- and one other very traditional metric (for size) is total market capitalization -- or the number of shares outstanding, times the NYSE price per share. [The then-current NYSE-value of the enterprise.]
As at the end of 2008 (Cover page of the SEC Forms 10-K):
MRK -- $81 billion.
SGP -- $32 billion.
Ergo, more than double.
[All of these other figures, above -- and ratios -- are from MRK and SGP SEC filings.]
नमस्ते
Great Post!
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