The pay-off that Bristol-Myers Squibb’s ousted chief executive Peter Dolan will be line for is unlikely to come close to the deals enjoyed by his peers at other major pharmaceutical firms.
Although the company has not released any details as to Mr Dolan’s severance package, analysts and compensation experts consulted by Reuters suggest that as he did not secure an employment contract when he became chief executive of the New York-based company in May 2001, the offer made will not be in the multimillions.
Steven Hall, managing director of compensation consultants Steven Hall & Partners, said he expects B-MS to pay Mr Dolan between $5-$8 million in severance, based upon a formula of roughly twice his most recent combined salary and bonus. Mr Dolan also held options on three million B-MS shares, Mr Hall noted, but their combined cash value was only $52,000 at the end of 2005, as a result of the major share price declines the stock had suffered.
WBB Securities analyst Steve Brozak told Reuters that a stingy severance settlement “would reflect badly on B-MS if they are seen as giving him the bum’s rush” and it could cause concern among the firm’s remaining executives.
While a pay-off of $5 million is nothing to be sniffed at, it pales into
insignificance when compared with Merck & Co’s chief executive Raymond Gilmartin who stepped down in May 2005 and walked away with some $35 million by exercising stock options.
Details of the package offered to his counterpart at Pfizer, Hank McKinnell, who resigned this summer, have not been disclosed, but some observers believe it may not be too far away from the $83 million lump sum he was originally offered, a figure which caused consternation among Pfizer’s shareholders.
