Initial indications were that Allergan's ($AGN) outgoing CEO David Pyott would collect about a $35 million golden parachute when Actavis ($ACT) finalized its $66 billion buyout of the Californian drugmaker, assuming he is out of a job. But it will be considerably more, nearly three times that amount.
Recent SEC filings show that Pyott would get about $89 million in cash and shares for his yet to vest for equity awards he's received through the years, Bloomberg has determined. Add on top of that the $9.91 million salary to which he is entitled, and about $2 million for accrued pension and health benefits for three years and you get $100.9 million.
"It might seem like an outlandish sum to the public eye, but in CEO-land, it's a fairly standard arrangement," Erik Gordon, a professor at the University of Michigan's Ross School of Business, tells the news service. "Given the stakes in these takeovers, cashing the guy out from what he's already earned, that's an easy pill for the board to swallow."
The public response to CEO compensation and payouts is, of course, a relative thing. In France, the €4 million signing bonus that Sanofi promised Olivier Brandicourt to become its new CEO sparked a rebuke of "It is incomprehensible," from a government spokesman.
Actavis' buyout of Allergan was the largest announced deal last year, at least largest that will close. Pyott's $100 million payday compares with the $80 million that Hospira CEO F. Michael Ball is expected to receive if he is let go after Pfizer completes its $15 billion deal for his company. Allergan had total revenues of about $7.1 billion last year, while Hospira's totaled about $4.5 billion.
Actavis CEO Brent Saunders will run the merged company, which will take on the Allergan name as Actavis uses the deal to push deeper into branded drugs. But while Saunders has indicated most of Allergan's top folks will be out, neither side has said what Pyott's future would be. Still it is likely he will take his spoils and move on. The company has said that Allergan President Doug Ingram will act as a special adviser to Saunders, a decision that was made after "extensive discussions" with Pyott.
- read the Bloomberg story