this is what he said yesterday,29th may 2008…..

” We should not expect dramatic changes in positions of the two committees of the corporation — the Executive Management Team (EMT) and Operations Management Team (OMT) — because we already have an unusually flat structure”

wholly expected !!
really helps to promote a sense of “we’re all in this together” …. aye right

I think the main point here is, if the BOD decides on CEO pay, options, restricted stock, perqs such as planes, etc - the BOD needs to be held accountable.

I have little trouble that most of those who complain, including me, would take the same package if offered, had we made it to the CEO level. And like most CEOs, probably think we deserved every penny.

I think I strive to emulate you as a former employee of SP. FH had the nerve to send out an e-mail this past week touting the positive feedback and support for the direction and management of this company he received from a number of high performers at awards presentations this past week. As you stated, this is a perfect example of the yes-man mentality that exists here. Did FH really expect to here anything negative at a meeting like this? (Don’t bite the hand that feeds you.) And if he did, woould you really expect him to let the field know. (Maybe through a public flogging!!!) Based on how the adopted OBS managers have changed the way they treat reps who have admired and trusted them for years, I really believe that a culture of fear and intimidation exists in the upper levels of SP management. I don’t know that SP was ever a great company, but is surely IS NOT one now!!!

I seemed to have transposed a number, but on Jan 22, FH granted the employees of SP 1000 options at the days close of $20.26. Although that tempers the gap a little. we nonetheless will be enriching FH into the millions before we make a cent. Realistically, does HE need this money more than most of the rest of it do? As a member of the field sales force, this mountain will be climbed with the management team on our backs!!! They really need to re-think their plans for compensating us for correcting their missteps (I think that is an extremely kind and conservative characterization of our present situation!!!).

If DeWaarheid’s is accurate, middle management must row for their lives on their $22.50 options, they’ll need to acheive a 20 percent increase in stock price, just to make a penny (with the stock now at $18.65). . . .
AND if they row that hard, and that fast, for that long — Hassan will already have made about $4.3 million in gains ($22.50 minus $18.85 times 836,000).

That is fairly astonishing — the high officers may sit back, and count on middle management to row like crazy — and every penny over $18.85 is gain to the top officers.

Clearly, Hans Becherer needs to pay more attention during the Board’s Compensation Committee meetings, or he needs to start getting more proactive advice. [Ira T. Kay: are you getting this?]

This state of affairs is, and should be, fairly demoralizing to Schering’s middle management — not at all in line with creating sensible incentives for excellent performers.

I agree that it seems the board hasn’t switched comp. philosophy to keep pace with the significant challenges Schering now faces.

It is time for Mr. Hassan to renounce this option grant. It is inconsistent with being a “roll-up ones’ sleeves”, turn-around CEO — if that is, in fact, what he professes to be.

Great dialogue here!

[As an aside: Nothing in the applicable law, rules or the Schering plans, would prohibit granting the "above market price" options to the top six-to-twelve-officers, and at (or nearer) the "current market price" options to the rest of the house. Yes, I've looked -- and looked carefully. That is a very common Fortune 500 practice, in situations like this one -- deeply declining stock prices.]

I was at SP for more thatn 10 years and left just before Fred came in. His predecessor and he have similar industry CEO traits; it seems both overlooked key middle management contributors moving their business, low to no recognition and early push out of people approaching middle age. A lot of excellent people left SP becasuse CEOs bring in yes men(and women) and their cronies. They are top heavy with compensation and bonuses while the results oriented managers, diectors and some VPs get squat!

Some people tried to even get back in right after Fred and Carrie came in but were told the “old SP culture” was not welcomed. WEll I guess the stock price could use some of the old guard performers back again.

Options are options and they have a strike price - it’s the same for all employees. I don’t think you can make it higher for some and not others. perhaps they could make the strike price retroactive to October 2007, when the stock was above $30 a share? Now that would be incentive!

Grants are more problematic because they’re outright gifts! If you get 100,000 shares @ $18.85, it’s worth about $2 million. If you get 800,000 shares, it’s worth about $15 million. Not a bad chunk a change to receive as a gift!

It’s almost enough to make you reject capitalism!!!!

I harped on Fred because he’s the ceo - he gets paid the most, he’s the leader and he’s been complaining about the reasons for the low stock price. But I agree that the same terms should be set for the other execs. I don’t mean to imply otherwise and, therefore, want to use this opportunity to clarify the point.

As to the stock price, since its already near $18.85 - it closed at $18.71 today - it isn’t a big stretch to hypothesize that, perhaps, it will rise. Unless, of course, there’s more disappointing news of some sort.

The question is whether he should be given options with a still higher exercise price as an incentive, since 80 percent of the options aren’t performance based - they will simply be his to exercise. So why not create more incentive and set them at, say, $23 to use an arbitrary, but not ridiculous number.

Incentives are supposed to be rewards for work done and goals achieved. If the stock price remains within the existing range - again, a hypothesis - he simply has to show up and then collect 80 percent of the 836,000 over the next three years. Doesn’t sound like true incentive.

ed