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| F. Michael Ball |
When Hospira's ($HSP) proxy was filed last year, CEO F. Michael Ball's $9.9 million in total compensation didn't even rank him among the top 15 highest paid biopharma execs. But with the $15 billion sale of his company to Pfizer ($PFE), Ball will achieve that goal that CEOs strive for: the payout of the golden parachute. In his case, it is a package that adds up to more than $80 million.
That total comes compliments of Joe Cahill of Crain's Chicago, who did the math on the stock options and restricted shares that Ball has received since taking the top spot at the Chicago-area company just four years ago. The bulk of the payout, $60 million, will come from collecting on stock options and restricted shares. Cahill points to one fortuitous grant Ball received in 2013 shortly after the price of the stock dropped on news about Hospira's ongoing manufacturing shortcomings. It came with an exercise price of $28.95. Pfizer is paying $90 a share.
Another $13 million comes from the 148,000 shares he owns outright, according to the company's most recent proxy statement, and then there is a bump on his annual salary and bonus that triggers when the deal is done. Cahill points out the company also worked things out to cover his taxes on all of this take-home pay.
To get to this prize, Ball helped Hospira overcome much of the quality "swamp" (a Ball idiom) it was sunk in when he took over. FDA warning letters have been issued on his watch and product recalls remain a regular occurrence, but the turnaround is enough to satisfy Pfizer. Tony Maddaluna, Pfizer's executive VP of global supply, told investors last week that after visiting three sites, Pfizer is comfortable with where all that stands. It was also enough that Pfizer is prepared to pay a 40% premium on the stock price to get the injectable drug and biosimilars specialist.
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| Pfizer CEO Ian Read |
Hospira's work in biosimilars is key reason Pfizer CEO Ian Read wants Hospira. The Lake Forest, IL, company has biosimilars approved in Europe, one up for consideration in the U.S. and yesterday announced it would work with San Diego-based Pfenex on a biosimilar of Roche's ($RHHBY) blockbuster eye drug Lucentis.
Hospira will add the bulk to Pfizer's established products division Read has been looking for. That unit was created in an organizational shake-up Read orchestrated last year and some analysts are hoping with the added product portfolio, Pfizer will spin it off. There has been some speculation that should there be such spin-off be on the horizon that Ball might stick around and become CEO of the new company. Still, others say that having remade Hospira into a prize worth buying, he will be sought after by other companies needing a makeover. Or perhaps he will take his $80 million and stay home.
- here's the Crain's blog piece (sub. req.)
- see the 2014 proxy statement
Special Report: 15 Highest-Paid Biopharma CEOs of 2013