Today's Schering-Plough shareholder vote is now history.And we see now that CEO Hassan's spin. Just. Doesn't. Fly. Anymore.
It clearly was no coincidence that Mr. Hassan took no questions, and made no presentations, at this afternoon's special shareholders' meeting. Out he goes, in his likely last public appearance before his shareholders (if one doesn't count the coming court appearances, in shareholders' derivative, and federal securities fraud class action, suits!) -- with a whimper -- not a bang.This blog tells the story of a public pharma company, felled by corporate mismanagement -- and a supine board of directors. By 2010, the Schering-Plough wordmark will vanish into "lost civilization" status. But it did not have to be so. Let us all do a better job of advocating -- as shareholders, and directors -- next time 'round:
When will Fred's tenure effective end or more specificly at what date does that payment based on share price kick in?
ReplyDeleteSalmon
The press releases all have said that CEO Hassan will resign as of the cloding date of the bust-up transaction. Right now, Schering expects that will be in Q4 2009.
ReplyDeleteI suspect it will slip to early 2010. So, the measuring price/date on most of the shares will be whenever Mr. Hassan decides to exercise his options (as he'll have three years from the closing date, in 2010 -- or until 2013, to do so). Specifically, Hassan's employment agreement provides that:
. . . .OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) GOOD REASON OR DURING THE WINDOW PERIOD; OTHER THAN FOR CAUSE, DEATH OR DISABILITY. If, during the Employment Period, the Company shall terminate the Executive's employment other than for Cause (and other than due to
Disability), the Executive shall terminate his employment for Good Reason at any time, or the Executive shall terminate his employment without any reason during the 30-day period (the "Window Period") immediately following the first anniversary of the Change of Control Date:
(i) the Company shall pay to the Executive in a lump sum in cash within 30 days after the Date of Termination the aggregate of the following amounts:
(A) the sum of (1) the Executive's Base Salary through the Date of Termination to the extent not theretofore paid; (2) any compensation previously deferred by the Executive (together with any accrued interest or earnings thereon) to the extent the Executive has elected to accelerate such compensation on his termination; (3) any accrued vacation pay; and (4) unreimbursed expenses due the Executive pursuant to Section 3(f), in each case to the extent not theretofore paid (the sum of the amounts described in clauses (1)-(4) shall be hereinafter referred to as the "Accrued Obligations");
(B) the product of (1) the greater of (I) the highest Annual
Bonus (annualized for any fiscal year consisting of less than twelve full months) earned by the Executive under the Cash Bonus Plans in respect of the three most recent full fiscal years ending on or prior to the Date of Termination, or (II) the Executive's target Annual Bonus for the fiscal year during which the Date of Termination occurs (such greater amount, the "Highest Annual Bonus") and (2) a fraction, the numerator of which is the number of days in the fiscal year of such termination through the Date of Termination, and the denominator of which is 365 (such product, the "Pro-Rata Bonus"); and
(C) the amount (such amount shall be hereinafter referred to as the "Severance Amount") equal to the product of (1) three and (2)
the sum of (x) the Executive's Annual Base Salary (determined
without regard to any reduction constituting Good Reason), (y)
the Highest Annual Bonus and (z) the highest of the amounts
contributed on behalf of the Executive under the Schering
Corporation Employee's Profit Sharing Plan or any successor or
replacement plan thereto and the Schering Corporation Profit
Sharing Excess Benefits Plan or any successor or replacement plan
thereto, for each of the three most recently completed fiscal
years preceding the Date of Termination. . . .
[To Be Continued, Below]
[CONTINUED]
ReplyDelete. . . .(and annualized for any
fiscal year consisting of less than twelve full months);
provided, however, that at the Executive's election, either (p)
the Severance Amount shall be reduced by the present value
(determined as provided in Section 280G(d)(4) of the Internal
Revenue Code of 1986, as amended (the "Code")) of any other
amount of severance relating to salary or bonus continuation to
be received by the Executive upon termination of employment of
the Executive under any severance plan, policy or arrangement of
the Company ("Other Severance") or (q) the Severance Amount shall
be payable in lieu of an amount of such Other Severance not
exceeding such present value;
(ii) for a period of three years from and after the Date of
Termination, or such longer period as any plan, program, practice
or policy may provide, the Company shall continue benefits to the
Executive and/or the Executive's family at least equal to those
which would have been provided to them in accordance with the
plans, programs, practices and policies described in Section 3(e)
of this Agreement if the Executive's employment had not been
terminated, in accordance with the most favorable plans, practices, programs or policies of the Company and its Affiliated Companies
as in effect and applicable generally to other senior executives
of the Company and its Affiliated Companies and their families
during the 90-day period immediately preceding the Date of
Termination or, if more favorable to the Executive, as in effect
at any time thereafter or, if more favorable to the Executive, as
in effect generally at any time thereafter with respect to other
senior executives of the Company and its Affiliated Companies and
their families, and for purposes of determining eligibility of
the Executive for retiree benefits pursuant to such plans,
practices, programs and policies, the Executive shall be
considered to have remained employed until the third anniversary
of the Date of Termination and to have retired on the date of
such third anniversary; provided, however, that if the Executive
becomes reemployed with another employer and is eligible to
receive medical or other welfare benefits under another employer
provided plan, the medical and other welfare benefits described
herein shall be secondary to those provided under such other plan
during such applicable period of eligibility; and, provided,
further, that to the extent that the Company's plans, programs
and arrangements do not permit such continuation of the
Executive's participation following his termination, the Company
shall provide the Executive, no less frequently than quarterly in
advance with an amount which, after taxes, is sufficient for him
to purchase equivalent benefits (the continuation of welfare
benefits for the applicable period set forth in this Section
5(a)(ii) shall be hereinafter referred to as "Welfare Benefit
Continuation");. . . .
[CONTINUED BELOW]
[CONCLUDED:]
ReplyDelete. . . .(iii) for purposes of calculating the Executive's benefits (and
benefits due to the Executive's beneficiaries) under the SERP,
the following special rules shall apply: (A) the Executive's
Benefit (as defined in the SERP) shall be 32% of his Average
Final Earnings (as defined in the SERP), subject to clauses (B)
and (C) below); (B) the Executive's Average Final Earnings shall
be computed as if the Executive had continued to be employed by
the Company in E-grade status (as defined in the SERP) through
December 31, 2010, and as if he had continued, through December
31, 2010, to receive his Base Salary at the rate in effect
immediately before the Date of Termination (determined without
regard to any reduction thereof constituting Good Reason), and to
receive, for each fiscal year concluding after the Date of
Termination but on or before December 31, 2010, an Annual Bonus
equal to the Highest Annual Bonus; (C) no compensation paid
pursuant to this Section 5(a), other than pursuant to Section
5(a)(i)(A)(1) and Section 5(a)(i)(B), shall be taken into account in determining the Executive's Average Final Earnings; and (D) the reduction for early payment under Section 4.3 of the SERP shall not apply;
(iv) notwithstanding any provision of this Agreement or of the 2002 Stock Plan to the contrary, the Options shall immediately vest in full and the Executive shall be treated, for purposes of the Options, as if he had incurred a "Termination of Employment by reason of retirement" within the coverage of Section 6(f)(i) of the 2002 Stock Plan; and
(v) notwithstanding any provision of this Agreement to the contrary, all 200,000 Shares shall immediately vest in full. . . .
So, in sum, "some pigs are MORE equal", no?
Namaste
Thank you so much!
ReplyDeleteSalmon
As mentioned in "History of the World Part I"....it is good to be the king!
ReplyDeleteWell put Condor. I have disagreed with you frequently, but there is no doubt that Fred and his band of merry marauders have done a great disservice with this bust up. Let us only hope that this ends his career in pharma!
ReplyDeleteRumor is that Fred already has a job with BMS.
ReplyDelete