Schering-Plough Lawyer Gets $500K Reward
15 CommentsBy Ed Silverman // December 12th, 2008 // 7:08 pm
At the same time the drugmaker is in the midst of laying off 5,500 employees in order to save $1.5 billion by 2010 (back story), Schering-Plough has decided to reward general counsel Tom Sabatino with a big bag of cash.
Specifically, Sabatino was just awarded a 7.4 percent pay hike that brings his salary to $857,100 from $798,000, and a special cash award of $500,000, according to a filing with the Securities and Exchange Commission. Why? The compensation committee recognized his “sustained strong performance as executive vice president of global law and public affairs and general counsel, and the increased responsibility he assumed for global administrative services in October of 2008.”
This is the second time in recent months the drugmaker has made such a move, even as thousands of other employees are shown the door. In September, the committee gave Tom Koestler, who heads the Schering-Plough Research Institute, a salary of $864,000, up 5 percent from $823,000; an increase in his annual incentive to 80 percent of base salary from 70 percent; and a service and performance-based stock award of 250,000 common shares, assuming he stays until October 1, 2012 (back story).
Of course, it’s certainly true that steady management is a crucial commodity and Schering-Plough clearly faces its share of legal issues (such as Congressional investigations, state attorneys general probes and shareholder lawsuits, to name a few). And Tom did take on added responsibility, according to the committee. But why give him such a deal now? Did he have a job offer? Whatever the reason, the timing is unfortunate.
Perhaps, Schering-Plough is aware that such rewards suggest are incongruent with its cost cutting. As the drugmaker did with Koestler’s package, the filing with the SEC did not show up until late on a Friday, a fine time for such things to go overlooked. As the thinking goes, any mention over a weekend is likely to gain little notice. If rewarding key execs with huge sums is worthwhile, however, then Schering-Plough should file its SEC documents mid-week - and be stand-up about it.
Also see ShearlingsGotPlowed
Condor
As I said below, and on my blogpost earlier — this development is particularly troubling.
At a minimum, it certainly seems a cynical gesture to say to the Schering shareholders “We want YOUR input — we are taking a survey of all of you — about executive pay. . .”
And, a month or so later, turn around and award a HUGE MID-season cash payout to one.
This al stinks to high heaven — and Wellington (a nearly 12 percent stockholder of Schering) ought to light a bonfire, gather the pitchforks, and ring the bell to summon the villagers. . . . it is past time to head up to Dr. Frankenstein’s castle — to figure out what sort of monster has been loosed by this Compensation Committee — under Hans Becherer.
Not that I am worked up about it, or anything.
Great stuff, as ever, Ed — but I suspect Tom S Sabatino *won’t* be getting you that Cartier watch, now (especially since you’ve run such a flattering pic of him — not)!
Namaste.
Former SP
Hush money!!!!!
Observation
He appears to be a pig without lipstick!
matt
Like a pig baby!
Condor
Well — in an entirely-satirical update vein — I couldn’t resist the temptation to make a VIDEO Christmas Card — to all Schering-Plough stockholders, employees, newly-ex-employees and law-firm services/suppliers — from those two tild and wacky rich guys, “Hans and Tom”. . . . They’re gonna’ Pump. Tom. Up!
Do take a look — it is only 1:20 in running time — and offers a “lump of coal” for every boy and girl!
Click this link:
http://shearlingsplowed.blogspot.com/2008/12/merry-christmas-from-hans-becherer-to.html
Cheers!
Insider
Paid in silver, no doubt.
Jeffrey Clark, CEO of Beaker.com, The Online Community for Life Sciences Professionals
How they can rationalize this in this market is beyond me. As a former life sciences search consultant my hunch is that they had a real, founded reason to believe he might be getting courted by someone else in the industry. That’s the only rationale I can see for a $500,000 ’special cash reward’ that, I am sure, comes with some vesting plan that keeps him at SP for the next few years.
Dman
The reason why these jerk off lawyers continue to these bonus payouts is simple.
Schering makes more money by keeping itself out of trouble (federal or other) that what they would make with a few more sales reps.
Remember-
Drug companies HATE whistleblowers
Doc
The argument that ‘he might be getting courted by someone else’ reminds me of one of my favorite quotes.
“The cemeteries of the world are full of indispensable men” - Charles de Gaulle
Rationalization is the correct term regarding Mr. Sabatino’s bonus.
Condor
Great dialogue, above.
Now, to answer the speculation of Jeffery Clark, here — while what he posits seems, at first, quite reasonable (i.e., a multi-year vesting schedule) — the SEC Form 8-K disclosure rules (with which Schering has apparently complied, as of Friday night) would require that the terms and schedule for vesting be DISCLOSED — just the way the award was — in the SAME Form 8-K. None were.
It is a certainty, then, that ALL the cash is his to spend — no strings attached.
So — no chance on that, folks. Thus, I would argue this was — in view of the circumstances — a simple, but actionable breach of fiduciary duty, on the part of the Schering Compensation Committee.
Namaste
BPW
My guess is that old Tom S. was the driver behind the “CafePharma is a bathroom wall” strategy just launched by SP to prevent discovery by opposing legal counsel is the massive number of lawsuits against SP. Given the absolute brillance of this effort alone, surely he deserves his raise and “special cash award. he and Tom K. are likley only 2 of several that will receive these incentives to stay and SP and keep their mouths shut. If these guys were to leave and be called to testify, it could be curtains for fred and carrie.
chris
Obscene! If you put a couple of horns on him, he looks like Lucifer himself!
Joe
This is no different from the Brent Saunders million dollar bonus for the year that he personally contributed to a $50 million loss on the HomeAgain venture.
Pay for performance … do as I say, not as I do.
The Board is once again asleep at the switch.
SP 2
So it’s Brent S., Tom K. and Tom S.! How many other top SP execs have received their outrageous raises, bonuses and special cash awards while thousands are laid off. This is an example of American capitalism at its worst. No wonder the drug companies are grouped along with oil and tobacco as the most hated groups of companies in the country! None of these people are indispensible. They just think they are!
Andy
They should bott the entire executive team. They’re simply a bunch of greedy bullies. Unfortunately, the Board is a bunch of puppets that bury their heads in the sand. SP is digging its reputation hole deeper and deeper with these ridiculous slary and bonus increases. Where are these clowns going to go? If they were let go like thousands of others from SP, they would know how hard it is to find a new job.
Shareholders - it’s time to oust the Board!!!!