At the same time the drugmaker is in the midst of laying off 5,500 employees in order to save $1.5 billion by 2010 (back story), Schering-Plough has decided to reward general counsel Tom Sabatino with a big bag of cash.
Specifically, Sabatino was just awarded a 7.4 percent pay hike that brings his salary to $857,100 from $798,000, and a special cash award of $500,000, according to a filing with the Securities and Exchange Commission. Why? The compensation committee recognized his "sustained strong performance as executive vice president of global law and public affairs and general counsel, and the increased responsibility he assumed for global administrative services in October of 2008."
This is the second time in recent months the drugmaker has made such a move, even as thousands of other employees are shown the door. In September, the committee gave Tom Koestler, who heads the Schering-Plough Research Institute, a salary of $864,000, up 5 percent from $823,000; an increase in his annual incentive to 80 percent of base salary from 70 percent; and a service and performance-based stock award of 250,000 common shares, assuming he stays until October 1, 2012 (back story).
Of course, it's certainly true that steady management is a crucial commodity and Schering-Plough clearly faces its share of legal issues (such as Congressional investigations, state attorneys general probes and shareholder lawsuits, to name a few). And Tom did take on added responsibility, according to the committee. But why give him such a deal now? Did he have a job offer? Whatever the reason, the timing is unfortunate.
Perhaps, Schering-Plough is aware that such rewards suggest are incongruent with its cost cutting. As the drugmaker did with Koestler's package, the filing with the SEC did not show up until late on a Friday, a fine time for such things to go overlooked. As the thinking goes, any mention over a weekend is likely to gain little notice. If rewarding key execs with huge sums is worthwhile, however, then Schering-Plough should file its SEC documents mid-week - and be stand-up about it.
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