Merck Execs Protected in Case of Takeover (CYA severance deal)

Tab

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Mon Nov-29-04 08:27 PM
Original message

Merck Execs Protected in Case of Takeover (CYA severance deal)

NEW YORK (Reuters) - Merck & Co. Inc. has adopted a severance benefits plan aimed at protecting key managers in the event the company is taken over -- a growing possibility since the withdrawal of arthritis drug Vioxx sent shares tumbling.

Merck said in a regulatory filing that under certain circumstances the company's management committee and other vice president-level managers, or about 230 people, would receive a package including cash, health benefits, possible retirement benefits and help with financial planning.
http://news.yahoo.com/news?tmpl=story&u=/nm/20041129/bs_nm/health_merck_dc

Unfortunately this article doesn't give the juicy details of how generous the change is for the lucky 230 executives, but if it's meant to be prohibitive it must be wicked juicy. No protection, apparently, for their tens of thousands of employees, I infer.

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420inTN

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Mon Nov-29-04 08:28 PM
Response to Original message

1. Gee... what a surprise.

NOT!

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Tab

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Mon Nov-29-04 08:56 PM
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2. Those juicy details...

RENTON, N.J. (AP) -- Merck & Co. Inc. has adopted a new severance plan that offers some executives one-time payments of up to triple their salary and other perks if the troubled pharmaceutical giant is acquired and they lose their jobs.
...
The 230 executives would get between 1 1/2 and three times their combined salary and maximum bonus, distributed in regular monthly payments. They also would get a lump-sum, prorated annual cash bonus, pension and other retirement benefits to which they were entitled, and temporary continuation of medical, dental and life insurance.
http://hosted.ap.org/dynamic/stories/M/MERCK_SEVERANCE?SITE=FLPET&SECTION=HOME

It goes on to say that regular employees get immediate vesting of their stock options, which is.. whoopdeedoo, since the stock presumably tanked enough to make it attractive enough to buy out. But for the top 230 execs to get triple their salary, plus pension, retirement, bonus... wow.

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Gothmog

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Mon Nov-29-04 09:28 PM
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3. Golden Parachutes for all

This trick will make it somewhat expensive to takeover Merck. It will be interesting to see (a) when the first shareholder suit is filed attacking this plan and (b) if the courts uphold the plan.

There is very little case law on golden parachutes because the courts have taken the position that the agreements are not ripe for attack until triggered and after the severance events are triggered, the purchaser usually has better things to do than litigate the severance plans.

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Boosterman

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Mon Nov-29-04 09:34 PM
Response to Reply #3

4. Interesting point

If so kudos on a good business move if it works. If its crap for the execs scew em.

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