How Is It That Merck's Most Recent CEO Pay "Goes Missing" -- Just Like Schering-Plough's Did -- Last Year?

The New York Times is out with its annual list, and graphics, of 2009's highest paid CEOs. At the bottom of the list is Steve Jobs -- he takes less than $100,000 a year from Apple (of course he has equity, but his salary and bonus are under $100,000). That's the bottom.

Off the radar screen entirely -- is Merck CEO Dick Clark, for 2009 (just like Ex-CEO Fred Hassan before him, at legacy Schering-Plough, for 2008). All the other publications will soon have their 2009 CEO Compensation charts out, and it is likely Merck will be entirely sub-rosa in those, as well. Not because Mr. Clark earned less than Mr. Jobs did -- but because New Merck has adopted old Schering's annual meeting calendar.

"What does that have to do with anything?", you might sensibly ask.

Well, The New York Times' chartists used a March 27, 2010 company SEC filing cutoff date, to put together their list, viz:

. . . .The compensation research firm Equilar compiled data reflecting pay for 200 chief executives at 199 public companies that filed their annual proxies by March 27 and had revenue of at least $6.3 billion. . . .

Forbes and Fortune are picking similar cut-off dates, as I type this. Most of the Fortune 200 hold their annual meetings in early- to mid-May. And that, in turn, generally requires the mailing of a proxy by the week of March 29 to April 3, to ensure enough time for brokers to retransmit to beneficial owners, and get the vote in.

Because public company CEO (and Top Five) compensation is disclosed, by SEC rule, in connection with the annual financial reporting (and annual stockholder voting) cycle (and subsequent shareholders meetings), the later in the Spring one's meeting is held, the later one may safely mail one's proxy (and file it with the SEC) -- and thus, the later the proxy goes out, the better the chances that it will be filed "too late" to be caught by the journalists/pay-tabulators.

In general, legacy Schering-Plough's annual meeting date was at least a full three weeks later than old Merck's, pre-bust-up. Now, because Schering-Plough technically sold its public shell, on November 3, 2009, to Merck -- to do the bust-up deal, and Merck kept that shell (after a series of steps, including renaming it "Merck & Co.") -- at least for this year, New Merck was able to also take-over legacy Schering-Plough's May 25, 2010 stockholders' meeting date.

That, in turn, means that CEO Dick Clark's compensation won't be filed with the SEC, and thus publicly-disclosed, until possibly as late as mid-April 2010. So. . . Abracadaba!

CEO Clark's 2009 pay just went "poof!" -- for most casual observers. As I type this, Mr. Clark has been paid for 2009, for over four months. His shareholders have literally no idea how much they -- via the New Merck board of directors -- paid him for 2009. And they won't know for a few weeks' time, yet. It may be after most shareholders have already paid the IRS its taxes on their own 2009 earnings -- after April 15.

In sum, there is something decidedly "smarmy" about the calendar manipulations used by legacy Schering-Plough's compensation committee. It would be unfortunate if Mr. Clark chose to continue this wiggly, "bob-and-weave" compensation reporting approach, after this year. He hasn't nearly the motivation, or need to do so, that legacy Schering-Plough had. But that is the meta-narrative of this entire blog. [Hopefully, as a lawyer by training, Mr. Frazier too, will see the wisdom of being more statesman-like with pay disclosures.]

Here's to hoping that Merck returns to a more traditional Annual Meeting date for 2011. The date for 2011 will be announced in. . . you guessed it! -- the same proxy that will hold Mr. Clark's 2009 compensation data -- in a few weeks' time.

[Enjoy whatever you choose to celebrate today.]