Merck, Vioxx and the Wacky World of Executive Pay

The AFL-CIO has started a nifty little web project called “Executive Pay Watch” which begins, “A chief executive officer of a Standard & Poor’s (S&P) 500 index company was paid, on average, $9.25 million in total compensation in 2009.  At the same time, millions of workers lost their jobs, their homes and their retirement savings in the worst financial crisis since the Great Depression.”  Although the Obama Administration is trying to respond in a very limited way (much to the chagrin of corporate miscreants like AIG), don’t hold your breath that much will change with financial reform bill.

Meanwhile, executives keep raking it in despite their corporate shenanigans.  Take Merck, for example, makers of Vioxx, the multi-billion dollar blockbuster arthritis painkiller, which the company knew greatly increased the risk of heart attack or stroke but didn’t tell, and ultimately killed or severely injured tens of thousands.  Merck is being sued by 13 state Attorneys General to recover money paid to cover prescriptions for the defective drug, for which state taxpayers footed the bill.  This week, the former head of Louisiana’s Department of Health and Hospitals, testified that the company failed to tell Louisiana health officials about Vioxx’s heart-attack risks and that “managers of Louisiana’s state-sponsored health plans would have denied coverage for Vioxx prescriptions if they’d known the drug posed a greater heart-attack risk than rival medicines.”  The state wants its money back and frankly, it’s not even that much money – about “$11 million in damages, plus expenses and attorneys fees.”

Hey wait, where’d I hear that number $11 million before?  Oh yeah, it’s the 2009 compensation package of Merck’s CEO!  RIchard T. Clark wasn’t CEO during the Vioxx debacle, but he’s fighting victims just the same including the state of Louisiana. Actually, Mr. Clark got more than that according to the proxy statement filed with the Securities & Exchange Commission and in their world, this is an embarrassing decrease! (Leave it to the business trades.). 

In fact, Mr. Clark’s money is nothing compared to the compensation packages of execs at Schering-Plough, which Merck bought last year, who apparently, “walked away with massive pay packages, thanks to 'golden handshake' deals that were part of their pay agreements with Schering. So, according to the SEC filing, CEO Fred Hassan earned $49.65 million in 2009, while EVP Carrie Cox took away $32.3 million and EVP Thomas Koestler left with $24.56 million. But ex-CFO Robert Bertolini beat them all: His 2009 pay ended up as $53 million.”

Meanwhile, Merck reported $12.9 billion in profit, up 65 percent from last year.   Nothing like coming out ahead.