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Merck's Munificence: Ex-Schering CEO Fred Hassan Walks Away With $50M

The merger of Merck (MRK) and Schering-Plough cost 17,500 employees their jobs -- but management made out like bandits. In total merger-related payments of cash and stock, former Schering CEO Fred Hassan (pictured) walked away with nearly $50 million, according to an SEC filing. Separately, Merck CFO Peter Kellogg received $500,000 over the last couple of years just to move house.

Hassan wasn't the biggest beneficiary of the merger. That honor belongs to CFO Robert Bertolini, who pocketed $53 million. Here's the summary of jackpot payouts for the old Schering management:

  • CEO Fred Hassan $49.65 million
  • EVP Carrie Cox $32.3 million
  • EVP Thomas Koestler $24.56 million.
  • CFO Robert Bertolini $53 million.
At Merck, CEO Richard Clark saw his total compensation fall to $16.8 million from $25 million the year before. Here's the summary table for all executives from both companies (you'll have to click to enlarge it):

The only Merck manager who saw his compensation rise was CFO Kellogg, who got $3.7 million, up just over $200,000 from the year before. Kellogg also had the largest amount of "other" compensation, $404,900. About $381,375 of that was related to selling Kellogg's house, the company said:

... in accordance with Old Merck's Relocation Policy, expenses totaling $381,375 related to the disposition of Mr. Kellogg's prior residence were paid on his behalf through December 31, 2009.
Kellogg received $79,829 in relocation expenses in 2008 and $42,690 in 2007 under the same policy, Merck disclosed. That's $503,894 in relocation expenses just to move Kellogg from A to B. Kellogg joined the Whitehouse Station, N.J., company in 2007 from Biogen Idec (BIIB), which is based in Cambridge, Mass.

Merck did not immediately respond with a request for an explanation, so here's some speculation: Kellogg's move coincided with the collapse of the real estate market. Was he forced to sell his Massachusetts pad at a loss, requiring Merck to make him whole as a result?


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