Ex-Sanofi CEO Viehbacher in line for up to $7.8M cash payoff

Former Sanofi CEO Chris Viehbacher

When a CEO falls from grace, people want to know how soft the landing might be. For the now-former chief of Sanofi, Chris Viehbacher, there's plenty of money for a cushion, but it won't be nearly as plump as the packages granted to his counterparts in the U.S.

Under Viehbacher's contract with Sanofi ($SNY), he's eligible for 24 months' worth of fixed compensation, plus 24 months' worth of variable pay, based on his last batch of incentive compensation. With €1.26 million in base salary for 2014, plus €1.7 million in 2013 variable compensation, the 24-month package would be about €6 million or about $7.5 million.

But according to Sanofi's annual filing with the U.S. Securities and Exchange Commission, Viehbacher only gets the full amount if Sanofi met certain performance targets for the previous three years. That's two out of three of the following: net income to net sales of at least 15%; cash flow to net sales of at least 18%; and net sales growth equal to or higher than the industry rate.

Also, Viehbacher's "termination benefit" has to be a., nonvoluntary, and b., linked to a change in control or strategy. He has the former covered. As to the latter? The board said in Wednesday's statement that the company would be sticking to its current strategy. A potential sticking point.

What about stock and options? Sanofi has a complicated formula for option and share awards, with performance targets--profits, shareholder returns, and so on--that apply to vesting of both. The board awarded €8.2 million in performance shares from 2009 to 2013, but the 2012 and 2013 shares--about €4.7 million worth--wouldn't vest till 2015 and 2016. There's no mention of accelerated vesting associated with his departure.

As for any pension benefits under Sanofi's plan, he'll be out of luck. Viehbacher would have to end his career at the company to qualify for payouts. But the board thought about this fact when setting up his compensation package, the annual filing helpfully states.

To put all this in context, consider David Brennan, pushed out of AstraZeneca ($AZN) in 2012. With accelerated vesting of shares and options, plus severance pay and pension, he stood to collect $65 million. Daniel Vasella, the former chairman and CEO of Novartis ($NVS), was set for a $78 million exit deal, until public outcry persuaded the company's board to cut that to $5.2 million. Then there's Viehbacher's predecessor at Sanofi, Gerard Le Fur, who was said to be in line for a $11.3 million payoff package at the time. (For more golden handshake numbers, see our 2012 list.)

Of course, a potential cash payoff of $7.5 million is nothing to sneeze at, especially in light of the typical severance package of workers laid off in the pharma business. Plus, Viehbacher might look to the recently departed CEO of Galena Biopharma ($GALE), Mark Ahn, who left to "pursue other goals." According to an SEC filing, Ahn would leave not only without early vesting of his options, but also with no severance pay. Then again, Ahn was under an SEC investigation.

- here's Sanofi's 20-F

Special Reports: The 15 highest-paid biopharma CEOs of 2013 | Top 20 highest-paid biopharma CEOs of 2012 - Chris Viehbacher, Sanofi

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