The Good Old Days: Hassan Got $30.3M In ‘07
6 CommentsBy Ed Silverman // April 24th, 2008 // 7:10 am
One day, Fred Hassan may look back and pine for 2007. Why? Schering-Plough stock rose nearly 14 percent during the year. And his board of directors awarded him with $24.7 million in compensation, a 2.2 percent increase. Never mind the $1.59 billion loss - there was a 20 percent gain in revenue.
Overall, Schering-Plough’s performance has been “excellent” since Hassan took over in April 2003 when compared to its prior results and against seven other large drugmakers, according to the proxy statement filed with the Securities and Exchange Commission. His compensation was exceeded by execs at two drugmakers in what Schering-Plough considers its “peer group,” Abbott Labs and Johnson and Johnson, the Associated Press notes.
Last year’s salary totaled $1.67 million, up from $1.65 million in 2006, although there was no bonus. Most of his compensation, $18.4 million, came from stock and stock options awarded in 2007, more than double the amount in 2006. He also received over $608,000 in perks - $292,250 in contributions to savings plans; $146,680 for personal security; nearly $81,000 for life insurance; $75,544 for use of company aircraft; $7,000 for financial planning; $2,500 for tax preparation; $3,127 for home security, and $1,101 for a company car and driver. (But why can’t he pay for his own home security?)
The total pay includes executives salary, bonus, incentives, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year. There was also about $4 million in non-incentive equity compensation. Hassan had no above-market returns on deferred compensation. The calculations don’t include changes in the present value of pension benefits, and they sometimes differ from the totals companies list in the summary compensation table of proxy statements filed with the SEC.
One interesting passage: on page 22, there’s a “special note about 2008,” in which the board complains that the Vytorin controversy is jeopardizing Fred’s net worth. The stock price has fallen enough that the “five-year transformational incentive” for Fred, Carrie Cox and three other senior execs would have been zero had the performance period ended March 31, 2008, instead of last December 31.
rainnn
One correction — he actually made $30.32 million in 2007 –some $16.8 million of that, entirely non-forfeitable.
Now, that last admission, about 3.31.08 v. 12.31.08 — the “backhanded gravy-train” admission — at Dot Point 1, quoted from the Compensation Report (at page 22) of the just-filed 2007 Schering proxy — says a lot more about the Schering-Plough Board, and its supposedly-independent, pro-active Compensation Committee, than it does about the Schering executives, actually (after-all, why would they ever push away from the table — “No, really, Uncle Hans [Becherer] — I’m stuffed! I can’t eat even one more gravy-laden biscuit!”). And that is unfortunate for all affected communities — Schering employees, stockholders, customers, suppliers, the pill-poppin’ public, and the doctors prescribing ‘em. . . .
But maybe I’m just surprised that the Board has paid this much, for presiding over a flawed study, one that flat-lined the flagship franchise. . . . I dunno.
As ever, more at shearlingsplowed.
rainnn
Said another way, why wouldn’t it be more appropriate to measure “Total Shareholder Return” as an average of, say, eight values, each year — the four quater-ends of each year (all shareholders are keyed to buying and selling at quarter ends), AND the four mid-points of each quarter?
Just to “keep it fair?”
I wonder — why not, Mr. Becherer?
Ed Silverman
Hi Rainnn,
I changed the total compensation figure, which initially reflected what was reported by the AP. Their total doesn’t include the $4 million in non-incentive equity compensation. To keep it simple, I’ve now included that in the total, which also changed the annual increase to 2.2 percent, instead of 2.7 percent.
Thanks for writing in,
ed
MKM
Jeopardizing their net worth? Cry me a river!
Marilyn
SP 1
It seems that the man has no conscience. Show me the money! I’ll make the “tough” decisions and cut 10% more if you raise my compensation! I think he’s a complete fake. Look at that grin - only a mother could love it. He rakes it in while he squeezes all of the rank and file. He represents the worst in corporate America, but the Schering-plough Board may be worse. It appears that it’s stacked with Fred fans ready to pay homage to the Big Pharma “god.” They are worried about Fred’s net worth? Do your job and let him know he needs to really improve his performance in his position. net net - he’s done little for SP. They may have made a couple of steps forward, but they followed it with several steps back. And they also face potential major shame and fines!!
Bless The Truth
How can this type of guy sleep in the night? No wonder he has to pay close to $150k for personal security. Is he able to drive through McDonald for bugers and fries?? Pls. tell Hassan to give 90% of his wealth to his fired employees…..after all life is not all about rotten money!