This is crap — the craven, corrupt corporate heads of the makers of Vioxx are planning for their golden parachutes as the sh*t hits the fan. NYT — Merck to Offer Big Bonuses to Executives if It Is Taken Over.

With its stock down sharply and its ability to thrive as an independent company uncertain, the drug giant Merck has adopted a plan that will give its top executives a chance for big bonuses if the company is taken over.

Merck has been reeling since it withdrew its arthritis treatment Vioxx from the market on Sept. 30 after acknowledging that the drug can increase the risks of heart attacks. Today, Merck said in a federal securities filing that its board had decided to give its 230 most senior managers the opportunity for a one-time payment of up to three years of salary and bonus if another company buys Merck – or merely buys more than 20 percent of its shares. Any executive who was fired or resigned for good cause would receive the payment.

Merck has said that it is committed to remaining independent, and a spokeswoman repeated that position today. But the plan, which the board adopted last Tuesday, is the first formal acknowledgment that Merck is now so weakened that it may be vulnerable to a takeover.

Many other big companies have so-called golden parachute plans to protect top tiers of executives in the event of takeovers and to keep them from leaving if a takeover is looming. But experts on corporate governance say Merck’s decision to adopt such a plan was particularly ill-timed. Critics say the board is rewarding its top executives for its problems with Vioxx and the company’s inability to bring new drugs to market.

“It looks terrible, period,” said Tom Dewey, a lawyer who has consulted for pharmaceutical companies and their boards.

Merck did not disclose how much the executive payment plan might cost. But analysts said that even if the payments total hundreds of millions of dollars – as would be likely, given the number of people potentially covered by the plan – the amount would probably not be enough to discourage other drug companies from considering a takeover.

Pam Spaulding

Pam Spaulding