At Hospira, a “perfect fit” in pay…

March 10, 2011

Today’s post isn’t really another one about Allergan (AGN), but – coincidentally – a company that hired away one of its executives. The link between the two companies is F. Michael Ball, who on March 2 advised Allergan that “he would retire from the Company and resign from his position as President, effective March 27, 2011.” The very next day, Ball is set to become the new CEO and a director at Hospira, Inc. (HSP); he takes over from Christopher Begley, who is retiring as CEO but plans to stick around in the post of executive chairman.

Ball’s new gig at Hospira is a sweet one that can only get sweeter. His starting base salary will be $975,000 per year, and – after the bit in his employment letter (attached to this 8-K) that states he gets annual reviews – it adds that his salary “may be increased, but not decreased.”

Just for taking the job, Hospira is giving Ball a “one-time special hiring incentive” of $500,000 worth of stock options that will vest over three years. But those aren’t the only stock options that he gets. The company is also giving him an initial long-term compensation grant that includes $1.95 million worth of stock options and $2.925 worth of performance share units. Assuming the company performs well, he will likely receive additional LTIP grants in future years.

But even that’s not all that Ball gets. Hospira is giving him additional equity awards called “Make Whole” Grants under its long-term compensation plan (they will also vest over three years). He gets:

  • A grant value of $3,394,208 in shares of Hospira restricted stock to compensate [him] for the loss of unvested options from [his] prior employer;
  • A grant value of $710,000 in shares of Hospira restricted stock to compensate [him] for the loss of unvested restricted stock from [his] prior employer; and
  • A grant value of $1,929,621 in shares of Hospira restricted stock to compensate [him] for the loss of retirement benefits with [his] prior employer.

Since Ball will be working at Hospira for just nine months and four days during calendar year 2011, one might expect any annual incentive award that the company may give him to be pro-rated for the year. But his agreement is more generous than that: It states that Ball’s target is “will be 120% of your full year base salary, regardless of the actual salary paid to you during 2011.”

Begley and Hospira’s directors clearly have a lot of faith in Ball. In fact, in the March 7 press release that announced Ball’s hiring, Begley said about Ball, “…With his proven track record of growing complex global businesses, demonstrated success in leading diversified healthcare portfolios and strong commitment to creating value for all company stakeholders, we found the perfect fit withMike Ball….”

Given the very modest increase in Hospira’s stock price compared to a year ago (just 1.94%), no doubt shareholders are hoping that Ball is just the piece the company has been searching for.

Image source: wilhei55 via flickr

———

See more of what’s in the filings: Check out FootnotedPro, where we highlight unusual opportunities and potential problems well in advance of the market. For more information or to inquire about a trial subscription, email us at pro@footnoted.com.

Leave a Reply

You must be logged in to post a comment.