Celgene CEO Alles to bag $28M if he departs after BMS merger

celgene
Celgene CEO Mark Alles is set to receive three times his current salary and incentive pay if he leaves after the BMS merger closes. (Celgene)

In December, just weeks before Bristol-Myers Squibb swooped in with a $74 billion buyout offer, executives at Celgene put in place a brand-new change-in-control severance system. Now, industry watchers are getting a peek at just how much that arrangement will pay off for Celgene’s top execs should they leave after the deal closes—and for CEO Mark Alles, it’s quite a payout.

Alles is set to receive a total of about $27.9 million if he departs after the BMS merger closes, according to a proxy statement filed with the SEC earlier this week. That includes $17 million in equity, $10 million in cash and miscellaneous perks and benefits. BMS did not spell out its plans for the merged company’s executive team in the proxy, except to say that it will expand its board to include two current members of Celgene’s board.

Alles’ proposed postmerger payout amounts to three times his current salary and incentive pay. That was the severance deal Celgene put into place in December—a good move, considering Alles didn’t have an official change-in-control arrangement in place before.

Three other Celgene executives will receive 2.5 times their salary and bonus if they leave after the BMS deal closes. That would be worth $15.1 million for David Elkins, chief financial officer; $11.9 million for Peter Kellogg, chief strategy officer; and $12.2 million for Rupert Vessey, chief of R&D.

RELATED: Celgene executives whipped up new, lucrative severance plans ahead of Bristol-Myers megadeal

Elkins was the only member of that group to have a change-in-control arrangement in place prior to the new plan that was disclosed in December. But that plan would have only netted him 18 months’ worth of salary.

As for the benefits the four Celgene managers would receive, they include outplacement services and a continuation of health benefits for three years for Alles and 30 months for the others.

RELATED: Bristol-Myers confirms activist Starboard has its shares. And it wants board seats, too

Of course, this all assumes BMS shareholders will bless the merger when it comes up for a vote on April 12. That outcome isn't guaranteed, and one loud activist investor could try to disrupt the deal.

Hedge fund Starboard Value scooped up 1 million shares of BMS after it announced the Celgene buyout, according to a Jan. 31 filing. It’s gunning to pick up more shares and has nominated five new board members.

It’s not yet clear what Starboard is ultimately hoping to achieve, but some analysts have speculated that the fund will pressure BMS to put itself up for sale instead of buying Celgene. Starboard has reportedly hired a proxy solicitor to poll BMS investors about their level of support for the deal. For now, though, most Wall Street experts doubt Starboard will prevail.

Bristol-Myers' management has met with Starboard “on multiple occasions” since the fund bought up its shares, according to the proxy filed this week. BMS has not yet set a date for its 2019 annual shareholder meeting, which is when the vote on Starboard’s proposed new board members would occur. But that meeting will happen sometime after shareholders vote on the Celgene merger, BMS said in the proxy.

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