Celgene sweetened the pot for exec team ahead of Bristol-Myers merger announcement
A beleaguered Celgene $CELG, which was reportedly in merger talks with Bristol-Myers $BMY since September, had hatched a plan to sweeten the pot for its executive team ahead of the historic $74 billion deal announced on Thursday.
In an SEC filing filing posted on Friday, Celgene said its CEO, CFO, president of research & early development and chief corporate strategy officer became participants in the the company’s executive severance plan as of January 2. Their participation entitles them to severance benefits upon a termination of employment, without cause, or due to the employee’s resignation for “good reason” — either would be considered a “qualifying termination.”
If the qualifying termination occurs on, or within two years following, a change in control of Celgene, the severance benefits are generally: “a cash severance payment equal to 2.5x (or 3x, in the case of the CEO) multiplied by the sum of the officer’s annual base salary and target annual cash incentive opportunity…and full accelerated vesting of all outstanding equity awards granted under the company’s equity plan,” among others, the filing noted.
The move is pertinent, considering cuts and layoffs are all but certain if the deal is closed. Bristol-Myers expects to achieve $2.5 billion in annual cost reductions by 2022 as it merges the two operations. If Celgene CEO Mark Alles, who has largely borne the brunt of the criticism for his company’s bruised reputation and share price, is shown the door, he could potentially walk away with a tidy sum.
In a separate filing, it was revealed that either company would have to cough up a break-up fee of $2.2 billion if the deal were not consummated, depending on the firm responsible for blocking the merger.
In a report by Bloomberg on Friday, it was revealed that Celgene raised the price of its flagship drug, Revlimid, by 3.5% to $719.82 on Thursday, the day the Bristol deal was announced. The biotech, which persistently hikes the prices of its top-selling treatments, leans heavily on Revlimid revenue and is dreading the looming loss of patent protection on the product in the United States.