A welcome gift, or ‘Golden Hello’, partly conditional and paid over three years and estimated by Proxinvest in a first reading at € 6 million then increased to fifteen million including pension benefits, was made to the signing of the contract that binds the former Executive Board member and boss of the pharmaceutical division of German group Bayer to the French top pharma player Sanofi. Actually, the figure could be exceeding 15 million taking into account ten years of additional pension offered to the newcomer.
The company also communicated the generous remuneration terms agreed with its new CEO : a fixed EUR 1.2 million, a variable salary of up to 250% of the fixed plus the annual grant of 220,000 stock options and of 45,000 performance shares: an expectation, according Proxinvest for about EUR 6 million per year as estimated under the generous performance conditions generally used by Sanofi (1). …
Olivier Brandicourt is the ideal boss to Sanofi: a physician and biologist by training, Olivier Brandicourt, a specialist in infectious and tropical diseases, spend as intern eight years at the Pitié-Salpêtrière Hospital in Paris, in 1988 he joined the US laboratory Parke Davis, later bought by Pfizer and then joinded Bayer in 2013 for which he bought a division of Merck and oncology laboratory Algeta … In short, a unique experience, the post was only waiting for this man.
What is however not clear in the Sanofi press release is if part of the ‘Golden Hello’ offered, we are told, to Olivier Brandicourt, is possibly intended for Brandicourt to pay Bayer as a compensation for the non-compete clause breached by its recently appointed Head of Pharma... Because fact is that the contract of this “great man” forbade him to quit Bayer and join a competitor, and so he had , likely with the help of Sanofi, compromise on an indemnity paid probably by Sanofi to Bayer … why not between four to fifteen million euros? Or , even worse, Brandicourt keeps 15 million and Sanofi pays aside an undisclosed amount to Bayer ? This is still not clear and Bayer should be questioned as well.
Proxinvest, who spoke with the Chairman Serge Weinberg , interim CEO since the dismissal of Chris Viehbacherby the Board at the end of October 2014 , thinks it would be wise to explain the mechanics of such mercato dealings rather than to suggest that Olivier Brandicourt received millions without having worked a day for Sanofi.
This case is, for Proxinvest, remarkably illustrative of the current ” économie concentrationnaire”, according to Pierre-Henri Leroy words. Big pharmaceutical companies around the world pay huge salaries and practice an executive mercato perfectly comparable to the trade of football or basketball star players. The industry is very complex, it negociate prices with Medicare authorities and is known for its generous margins : accordingly it pays very high salaries to its top managing directors and employees. The real cause behind these indecent salaries at the top is for Proxinvest in the selection of directors and the convenience of the financial system as a whole for these eprotected employees, tehse excutives adored by our universal banks which are abnormally present in the investment industry. actually the influence of investment bankingh is felt over the selection and remuneration of top exécutives at listed companies. A complication that points to a difficult but possible reform of the financial system in Europe …
Pending such a big reform, Proxinvest is left to recommend investors to oppose the up-coming non-binding vote on the compensation of Olivier Brandicourt, which is simply excessive, particularly in terms of the wage ceiling of 240 minimum wage ( or 4, 8 million euros a year) as retained by Proxinvest for the best employed CEOs.
PARIS February 24, 2015
(1) Sanofi applies the following performance criteria: (i) the net income for each year, then the net income Medium, (ii) the ROA, (iii) leTSR or “value creation” and (iv) the average weighted Performance of Net Income Average Rate, ROA Performance Rate and TSR Performance Rate for the period, but the 2014 CEO package was also at large based on non financial criteria …
