- Medivation CEO David Hung, who negotiated the sale of his company to Pfizer for $14 billion, stands to gain almost $900,000 in performance bonus payments if the deal is successfully closed, regulatory documents filed last week by the company show.
- The compensation committee of Medivation's board of directors on August 29 confirmed company officers would be paid bonuses at 128% of "target" levels for 2016 as a result of the buyout. For Hung, this translates to $868,015 payable immediately before the merger closes (assumed to be September 28).
- Hung's bonus is part of an eye-watering $354 million the pharma executive is eligible to receive through sale of directly owned stock, option payments and a potential $35 million "golden parachute" payout if he is fired after Pfizer assumes control of the company.
Medivation's execs are being rewarded for their patience. After snubbing Sanofi's initial public offer of $52.50 per share and subsequent attempts at a hostile bid, Medivation successfully held out for a richer deal.
Five other pharma companies, including eventual winner Pfizer, contacted Medivation about a potential buyout following Sanofi's offer, according to documents filed with the Securities and Exchange Commission and released last week.
Several rounds of competing offers from the five companies whittled down the contenders to Pfizer and two other unnamed companies, each offering $80 or above per share. Pfizer won with a proposal to acquire Medivation for $81.50 per share, only $1.25 more than the next highest bidder.
That $81.50 price represented a nearly 57% premium to the closing price of Medivation stock the day before Sanofi announced its offer, and a nearly 70% premium to the average closing prices for the year ended August 19.
With the sale of Medivation, CEO David Hung can realize a pretty profit on his currently held stock in the company, along with options and other awards. Sale of currently owned stock would net Hung $118 million, with another $234 million from options and awards, if exercised.
If Hung is let go after Pfizer takes over, he would also receive 24 months of base salary (another $1.8 million) along with reimbursement of health care premiums. While Medivation wouldn't pay the taxes on that "golden parachute" package, Hung would still receive his $868,015 in performance bonus payments.