A transition from two angles at Celgene __»

June 21, 2010

Browsing through Friday afternoon’s filings over the Father’s Day weekend, we found an 8-K filed by biopharmaceutical maker Celgene Corp. (CELG) It spelled out the financial details of the executive transition it had previously announced on April 29: Chairman and Chief Executive Sol J. Barer, founder of the company that became Celgene, is gradually stepping aside and is being replaced as CEO by Robert J. Hugin, previously chief operating officer. Suffice to say it’s not cheap.

Then we came across a completely different view of Barer’s retirement: This Father’s Day feature on New Jersey dads, from The Star-Ledger newspaper, leading off with a compelling photo and mini-profile of the 63-year-old Barer.

That old corporate chestnut about retiring to spend more time with family wasn’t trotted out at Barer’s retirement announcement that we could find — Barer himself described it as an orderly changing of the guard — but it seems it could have been, in all sincerity: Among other details in the Star-Ledger piece, Barer has arranged for his children and their families — including 12 grandchildren — to move together to a 52-acre property in Mendham, New Jersey, by the end of this year.

The article describes Barer as “officially retired,” but as with many executive retirements these days, the transition isn’t a simple one. Barer stepped down as CEO, as scheduled, after the company’s annual meeting on June 16. But he’s remaining on as that curious creature, the “executive chairman,” continuing with a $1.14 million salary and a target bonus of $1.37 million until Dec. 31, according to an amendment to his employment agreement. At that point, his unvested stock options and other equity awards vest, a $1.6 million value as of the company’s April 30 proxy filing.

Hugin, meantime, is getting a salary of $975,000 a year — up 25% from last year — and a target bonus of $1.17 million, roughly double what it was previously, as an amendment to Hugin’s employment agreement sets out. Plus, he gets options for another 39,000 shares, split over four quarters, and 6,500 restricted stock units.

Starting Jan. 1, 2011, Barer loses the “executive” moniker, becoming the board’s ordinary chairman, drawing a $75,000 retainer for his board service — plus another $1.25 million “consulting fee” for at most 20 hours a week of “consulting, business development and similar services of a non-operating nature relating to the Company’s scientific and strategic initiatives,” according to his services agreement with Celgene, filed Friday.

(If he’s terminated without cause, the company has to pay the full amount through 2012.) He also gets company’s paid health insurance until he’s eligible for Medicare and up to $15,000 a year reimbursement for tax and financial counseling.

There are some obligations as well: He can’t compete with Celgene through 2013, for example. Plus, federal red tape means he has to wait to get the first consulting fees all at once after six months.

Still, given the terms of his retirement, its sounds like Barer can easily afford a little pro bono childcare in his off hours. It sounds like he’ll have a blast.

Image source: mijita via Flickr

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