According to a regulatory filing, Saunders will walk away with $14.9 million in cash and $23.6 million in equity, mostly stock based on performance.
In June, Chicago-based AbbVie announced it was buying Dublin-based Allergan for $63 billion. As details of the merger seep out, one detail emerging is the extent of Allergan chief executive officer Brent Saunders’ golden parachute. According to a regulatory filing, Saunders will walk away with $14.9 million in cash and $23.6 million in equity, mostly stock based on performance.
The filing is a proxy statement inviting Allergan shareholders to two special meetings related to the acquisition. The shareholders are being asked to vote on the acquisition. The board of directors of Allergan has unanimously approved the deal and encourage shareholders to vote for the acquisition.
Saunders currently owns 167,909 shares of Allergan stock, which at AbbVie’s acquisition price of $188 per share, comes to more than $31 million.
Other executives are eligible for compensation for “change in control,” including Matthew Walsh, executive vice president and chief financial officer, $4.1 million in cash $8.9 million equity; William Meury, executive vice president and chief commercial officer, $5.8 million in cash and $7.1 million equity; C. David Nicholson, executive vice president and chief R&D officer, $5.8 million in cash and $6.9 million in equity; and A. Robert Bailey, executive vice president and chief legal officer and corporate secretary, $4.8 million in cash and $4.8 million in equity.
AbbVie is partly acquiring Allergan to decrease its reliance on Humira, the best-selling drug in the world, which is facing the patent cliff in the next couple years. Allergan is best known for Botox and has a strong migraine treatment pipeline. The combined company will have revenue of about $48 billion this year. In 2018, the two companies generated $19 billion in operating cash flow.
Allergan’s fastest-growing therapeutic areas are medical aesthetics, eye care, CNS and gastrointestinal. AbbVie says the merged companies will have strong franchises across immunology, hematologic oncology, medical aesthetics, neuroscience, women’s health, eye care and virology.
In addition to the $38.7 million, Saunders will have $154,037 in other benefits, such as 36 months of medical, dental and vision benefits, and $100,000 of what Allergan dubs “outplacement benefits,” which includes two years of secretarial support.
In 2016, Pfizer was set to acquire Allergan for $160 billion, but was called off after the U.S. Treasury Department released a new set of rules making it more difficult for U.S. companies to conduct tax inversions. Tax inversions are when U.S. companies acquire companies headquartered in countries with low corporate tax rates, then shift their headquarters to those countries in order to pay lower taxes.
Saunders rise has been unusually fast, riding a series of acquisition deals. He ran Forest Labs, which was acquired by Actavis. He took over the merged companies, then headed Allergan after Actavis merged with Allergan. There was speculation he would take over Pfizer from Ian Read if that deal had gone through, but Albert Bourla eventually took over Pfizer with Read’s retirement.
It has been noted that Allergan hasn’t had a particularly good year. Shares picked up after the AbbVie bid, but shares were otherwise down significantly from the beginning of the year and previous years. The company abandoned the sale of its women’s health unit after the FDA rejected its application for Esmya for abnormal uterine bleeding in women with uterine fibroids in 2018, and its rapastinel for depression failed three Phase III clinical trials, leading to a $2.5 billion write-down for the company.
A number of activist investors have called for Saunders’ firing, but the company had kept him in the chairman and chief executive chair so far.
