Many of us have become so jaded with the escalating series of corporate scandals that it's hard to believe the next one can get any worse. However, it appears pharmaceutical giant Merck is willing to make a play for that highly dubious "honor."
Merck, now worried that it's mishandling of the dangers of Vioxx, opening it up to potentially billions in lawsuits from the thousands of consumers it may have injured (or killed), has established a plan of "golden parachutes" for hundreds of senior managers. While Merck would not disclose the actual amounts, it is estimated to total potentially hundreds of millions of dollars.
As noted in this morning's NYTimes article on the subject, in this world of mergers and acquisitions, it is not unusual for companies to develop "golden parachute" plans, to safeguard company "talent" should a takeover occur. But the timing of Merck's plans are particularly suspect, and frankly, downright insidious, as it's clear the company understands that it's odious behavior over the Vioxx scandal has weakened the company enough to make it a prime takeover target. As the Times notes, Merck is rewarding management for greed and corruption.
Ironically, the Bush Administration's "strong (ha!) dollar" policy may lead to Merck's downfall, as European pharmaceuticals, buttressed by the Euro's rise, may be able to acquire Merck on the cheap. GlaxoSmithKline and Novartis are believed to be the most likely competitors, although with increasingly stricter US controls on stem-cell and other emerging research technologies, any number of European drug companies might show interest.
Don't expect the Republican Congress or Bush Administration to make much of a fuss over Merck's rats jumping ship with their pockets lined with investors' gold. American BigPharma is the second largest contributor (after BigEnergy) to Republican political campaigns, with over $30 million given in the last two campaign cycles (2002/2004). This cycle alone, Merck contributed half a million to political campaigns, 72% of it going to Republicans. If anything, as Dwight has mentioned previously, Congress is much more likely to provide Merck with it's own "golden parachute" in the form of liability protection, aka "tort reform".
Posted by MB Williams at November 30, 2004 07:36 AM | TrackBack