Celebrex News
Merck CEO got $14.5 million in 2007
-Forbes
03/10/2008 - Merck & Co.'s chief executive officer, Richard T. Clark, received compensation valued at $14.5 million in 2007, an 80 percent raise in a year when the drugmaker took a $4.85 billion charge to settle much of the litigation over its former painkiller Vioxx.
Clark, who also is Merck's president, drew a base salary of $1.62 million last year, according to a regulatory filing Monday.
Merck shares hit a new 52-week low Monday prior to the filing and closed down 49 cents, or 1.2 percent, at $41.26.
Clark's salary was up 37 percent from his base pay in 2006, Clark's first full year at the helm of Whitehouse Station, N.J.-based Merck.
The filing noted that Merck's compensation committee voted to raise Clark's salary again, to $1.8 million, effective March 1, 2008, to put his base salary at the midpoint of peer company CEOs.
Most of Clark's compensation came from the value of stock and options granted to him last year: $8.23 million, the total of three grants made March 2, 2007, according to the proxy filing with the Securities and Exchange Commission. He received $4.85 million in stock and option grants in 2006.
Clark also received $4.31 million in non-equity incentive plan compensation in 2007, more than double the amount a year earlier. And he received $310,055 in other compensation, including $229,092 worth of dividend equivalents paid on restricted stock units not yet vested.
The miscellaneous compensation category also included $51,024 for a home security system, $18,686 in unspecified commuting costs, $10,125 in company matches to his retirement plan and $1,128 for unspecified aircraft use.
The Associated Press calculations of total pay include executives' salary, bonus, incentives, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year. The calculations don't include changes in the present value of pension benefits, and they sometimes differ from the totals companies report.
Clark, 61, became CEO and president in May 2005. He replaced CEO and Chairman Raymond V. Gilmartin, who was pushed out after Merck withdrew its blockbuster arthritis pill Vioxx, sending its stock price plummeting and triggering tens of thousands of lawsuits. The settlement, announced in November, would end the bulk of serious personal injury claims against Merck but still leave thousands of other lawsuits to fight.
Last year, Merck's net income fell 26 percent, to $3.28 billion, or $1.49 per share, although revenues were up 7 percent, to $24.2 billion. Also in 2007, Merck got Isentress, a new type of AIDS drug, approved by U.S. regulators and essentially finished eliminating 7,000 jobs under its 2005 restructuring plan.
Merck's products include the osteoporosis treatment Fosamax, Singulair for asthma and allergies and the cholesterol drugs Vytorin and Zetia, which it markets jointly with partner Schering-Plough Corp.
Among the proposals up for consideration when Merck holds its annual meeting April 22 are two aimed at limiting compensation of top company executives.
A Moorestown, N.J., man's proposal would limit remuneration to the top five executives to $500,000 a year in salary and nominal perks such as company car use and club memberships. Robert Morris wrote that amount 'is far above that needed to enjoy an elegant lifestyle,' and said other funds 'might better be applied to dividends.'
Another proposal, from the AFL-CIO, which owns 1,300 Merck shares, calls for giving shareholders an advisory vote on compensation of the top executive officers, noting that 'investors are increasingly concerned about mushrooming executive compensation which sometimes appears to be insufficiently aligned with the creation of shareholder value.'
The board of directors opposes both proposals, writing that they would interfere with Merck's 'ability to compete in the global marketplace' for highly talented employees.
A third shareholder proposal, also opposed by the board, would allow stockholders owning 10 percent of outstanding shares to call a special meeting to address urgent issues such as a major acquisition or restructuring.
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