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Icos sale to enrich top executives
Seattle Times business reporter
Icos Chief Executive Paul Clark is to receive a package of bonuses worth $4.3 million in connection with the company's sale to Eli Lilly, according to a filing Friday with the Securities and Exchange Commission.
The Bothell company said the bonuses to senior management, largely for retention, are collectively worth up to $13.6 million. They were granted to "reinforce and encourage the continued attention and dedication of participating employees."
The bonuses detailed Friday do not include other elements of Clark's "golden parachute," such as a severance payment worth three times his annual salary and performance bonus, and a cash-out of his stock options.
Friday's filing said he is getting a $950,000 retention bonus, a $2.5 million bonus for completing the sale and a $850,000 "special recognition" bonus, described cryptically as being for "certain equity awards foregone in the past."
In addition to Clark's payout, Chief Financial Officer Mike Stein will receive bonuses of $1.5 million; general counsel John Kliewer, $1.1 million; and human-resources vice president Michelle Yetman, $1 million. Chief Operating Officer Gary Wilcox will receive a $550,000 bonus, and marketing chief Leonard Blum will receive $405,000, according to the filing.
The bonuses will be paid in cash within five days of the handover to Eli Lilly, according to the filing.
No mention is made of retention bonuses for the 700 rank-and-file employees at Icos. Company spokeswoman Lacy Fitzpatrick said some nonexecutive employees in essential positions will get bonuses to stay until the takeover, but she would not say how many people are eligible.
Fitzpatrick said full information about the executive compensation packages will be released in coming weeks.
But Clark and other managers clearly stand to make millions more from the sale.
Clark's employment contract calls for a severance payment equal to three times his annual base salary and performance bonus. Clark's 2006 salary was set at $950,000, and his performance bonus was set at just over $1 million, according to the company's most recent proxy statement.
If he reached his performance goals, it would put him in line for a $6 million payment.
Icos filings say Clark has 3 million shares and options in Icos, but don't give a breakdown. The options will be vested on an accelerated basis.
Although many are worthless because of the decline in Icos' stock price, Clark still stands to cash out a large number that were granted at exercise prices below Lilly's $32-per-share buyout price.
Other Icos senior executives will receive severance payments equal to double their annual base salaries and bonuses.
Eli Lilly agreed to buy Icos for $2.1 billion earlier in the week to take full ownership of the impotence drug Cialis.
The Indianapolis-based drug company has said it plans job cuts at Icos. The deal is expected to close later this year, or early in 2007.
Fitzpatrick said Icos still does not know how many jobs will be cut in Bothell, or whether Eli Lilly plans to retain any presence in Bothell. She said employees are well aware of comments by Lilly chief Sidney Taurel earlier in the week that a "significant" number of jobs at Icos will be eliminated.
Employees are "disappointed" about the sale, she said.
Luke Timmerman: 206-515-5644 or email@example.com
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