The SanityPrompt

This blog represents some small and occasional efforts to add a note of sanity to discussions of politics and policy. This blog best viewed with Internet Explorer @ 1024x768

Wednesday, December 01, 2004

The New York Times: Merck Offering Top Executives Rich Way Out

So Merck executives push a drug they probably know causes serious heart problems for 5 years, their actions result in the devaluing of the stock, likely billions in potential lawsuits, not to mention the probability of numerous deaths. And today's New York Times tells us "Merck Offering Top Executives Rich Way Out"

It sure would be nice if Democrats decided to get behind corporate governance reform one day. The Merck board decided to vote special payments of up to three years salaries and bonuses if Merck is taken over by another company -- a likely prospect given the current levels of the stock. This amounts to theft from stockholders (and potential plaintiffs I suppose) of value they currently own that gets transferred to executives. One argument for such bonuses might be that you want to attract competent executives. But enacting this policy now for executives who are already attracted amounts to a windfall for bad management decisions. Does it increase the likelihood good executives will stay at Merck? I dunno. Do these guys really seem that good?

Analyst's recommendation: Dump the stock

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