The Vytorin Saga: Should Schering Plough's Chief Give Back His Bonus?
Hassan received $29.6 million in 2006, including a $19 million cash and stock bonus he is still receiving. That bonus was based largely on the Vytorin-driven increase in Schering's market cap. Though the options Hassan received are now underwater, he gets to keep his $9 million in cash, all of which would have been at risk had the stock tanked in November 2006, when Schering and Merck had intended to release ENHANCE at a medical meeting.
Study lead investigator John J. P. Kastelein of the University of Amsterdam says he would have had trouble making the deadline for the November meeting. But he believes if he had full control over the study, the results could have been presented in March 2007.
That would have put a set of cash bonuses for 2007 at risk if it had hurt the company's sales and earnings per share, potentially costing Hassan $4 million more.
In order for the 2007 bonuses to be paid, Schering had to grow sales by at least 12% and hit an earnings-per-share target of $1.10. In 2007, the company delivered sales growth of 16.8% and had earnings per share of $1.37.
Full story in Forbes.