According to FiercePharma's rankings of this very morning, despite the Wyeth sale to Pfizer exceeding Schering-Plough's sale to Merck by almost 50 percent in size [$68 billion (Pfizer) v. $41 billion (Merck)], the Ex-CEO of Wyeth didn't even crack the top ten.
I bet you can guess who was No. 1 on the list of the most overpaid Pharma CEOs in 2009. The No. 1 "eye-popper" beat the guy who wiped out his company, by over three-fold. He also beat the guy who survived, and closed the deal, at Pfizer -- by well-over three fold. Yep, that's "Fast" Freddie Hassan! [Note that the figures in the overall graphic at right need to be "grossed up" -- by about an additional 30 percent or so, so the top end -- $173.4 million, at $28 -- looks more like $225.4 million, at around $36/share for New Merck. And, remember to add about $9 million to the total -- for every $1 of increase on the NYSE in New Merck's per share stock price, over $36.] Do go read it all, but here's a snippet:
. . . .Welcome to to our annual look at the biggst CEO paychecks in the pharma industry. . . .
1. Fred Hassan | Schering-Plough | $49.65 Million. . .
6. Richard Clark | Merck | $16.8 Million. . .
8. Jeffrey Kindler | Pfizer | $14.8 Million. . . .
H/T to my anonymous commenters, for pointing me to the FiercePharma story.
UPDATED @ 1 PM EDT -- The New York Times' Prescriptions Blog is now running a similar story. The Times reminds that Ex-CEO Hassan has his "deal goggles" back on, at privately-held Bausch & Lomb -- where he's landed as board chairman.
6 comments:
Not sure I understand the point of this post. Parachute payments are a part of corporate life. If they were not what executive would be looking for deals or take risks that could put them out of a job? These payments are insignificant in the scheme of drug or health care costs.
Even top insurance executive pay adds pennies to monthly premiums.
I'd be more worried about the overly generous health benefits and retiree benefits for state workers and teachers. There is a real negative impact on every on every tax payer.
Hello, Quinn --
I am completely unconvinced that competent, measured risk-taking (including the kind that puts one out of a job, for the right reasons) is what was in play in Mr. Hassan's case -- in particular. [That, I think, is the point of the NYT "Prescriptions" blog's posting.]
Importantly, even if I were to agree that it was what was in play -- I suspect there are many equally (or more) able executives who would have taken the same job (jumped at it, in fact) for something considerably less than the $225 million payout Mr. Hassan garnered for just six years' work.
So -- in sum -- while I do understand the point of your reply, I think your logic is showing signs of wear and tear.
Namaste, just the same.
I was a VP Comp and Benefits so I may have some slight idea what I am talking about. For example, one major insurer was required to provide a state commission with the impact of executive salaries. The result, if all executives received NO compensation it would reduce premiums by about $7.00 per year.
The problem we have is health care costs, not premiums. It is quite sad so many people have bought into the misleading bashing of insurance companies as the problem.
[This is from the Prescriptions blog story's comment-box.]
This time, "Quinn" is trying to shift the blame -- an old game -- he suggests $225 million isn't really that much money, in the grand scheme of things.
So let Hassan have all that cash, he argues.
If the flaws in his logic are not plain enough -- at first glance -- let me offer an analogous counterpoint:
Quinn's argument boils down to "it's okay to steal from the shareholders, so long as the theft doesn't cost the product or service 'end user' too terribly much." Preposterous.
This morning, New Merck annouced that 16 facilities would soon close, worldwide. It announced 15,000 people would lose jobs -- and that number balloons to over 30,000 when we look back to the mid-point of CEO Hassan's tenure.
The notion that no one would do Fred's job (with his largely bumbling, out-of-touch demeanor), for less than $225 million is laughable, Quinn.
The notion that is not laughable -- at all -- is that toadies like you help set corporate compensation policies. In short, people like YOU are the problem. You think that if it doesn't add much to the end-users' cost, highway thievery is "okay".
It is not okay. Stealing is wrong. Full stop. There can be no cogent excuse for this sort of excessive compensation. None. Not even from a ex-corporate toadie like you.
Ask 15,000 families whose mouths still need feeding, while Hassan has grapes peeled for him. $225 million will buy a lot of peeled grapes.
Namaste, to all of good will.
There is no such thing as "excessive" compensation, there is only what the shareholders are willing to pay.
The question is not whether anyone else could do the job for less than $225M, or even whether they would do a better job. It is whether the shareholders would decide to contract with them to do so.
They (and you) are free to try to persuade them. I wish you all the best of luck.
Thanks for your opinion Dave --
I think you've set out a flawed understanding of public company corporate governance -- the shareholders had no direct say in 2005.
The shareholders didn't and don't set CEO comp -- the comp committee of the board does. Then the full board blesses it. Not until this year did the SEC grant mandated "say on pay" advisory only votes to shareholders.
So, when CEO Hassan came in 2005, the comp committee set his contract with aid of a conflicted comp consultant from Wyatt WHeeler.
[Search those names on this blog, in my search box, and read from Schering-Plough's own SEC disclosures on the matter.]
You also seem unaware (don't even umention, nor likely understand) that the independent invovlement of the boards of most public companies (in 2005, at least) was minimal. A board's comp committee made the recommendation, and in the case of legacy Schering-Plough, the comp committee relied on a consulting firm with deep ties to Mr. Hassan's and his cronies, when it set his contract -- the one that yielded the eye-popping payout for atrocious mismanagement.
The shareholders should be able to expect comp decisions will be made with the aid of non-conflicted advice -- from their board. Full stop. Thus the SEC has mandated say on pay advisory votes.
Namaste, just the same.
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