"Market capitalization," wrote Wolf, Schering-Plough's corporate secretary, vp for governance and associate general counsel, "was not a performance metric for any incentive plan since Fred joined Schering-Plough." However, the drugmaker did use market cap as a metric in 2006, according to the 2007 proxy (please see page 25).
Interestingly, market cap was never listed in the 2006 proxy as a part of the plan to be adopted by shareholders for measuring compensation (please see pages 41-42), although total shareholder return was listed. Both are based on stock price, which was rising back then thanks to Vytorin. In effect, there was double weighting. More recently, the stock has been falling and - you guessed it - the market cap metric doesn't show up in the 2008 proxy.
So was the mention of market cap in the 2007 nothing but an unfortunate mistake? If so, will Schering-Plough amend the filing? If not, what was Wolf trying to suggest when she wrote that market cap was never used as a metric? We asked for an explanation, but never received one. Either way, some shareholders may not be too thrilled.
Hat tip to Shearlings Got Plowed