Fearing Icahn’s Impact on Morale, Biogen Idec Launches Key Employee Retention Plan
Call it the Icahn Effect. To help keep top executives, scientists, and other employees on board and productive in the face of ongoing uncertainty and anxiety over Carl Icahn’s efforts to force a sale of the company, Biogen Idec (NASDAQ:BIIB) has launched a retention program that offers key employees bonuses of up to 150 percent of their annual salary. Employees must remain continually employed at the company through March of 2009 to qualify for the bonus, unless a change in company control occurs before then and they lose their jobs involuntarily, according to a regulatory filing posted this afternoon.
The filing specifies that all key employees in the company are eligible for the bonus except CEO Jim Mullen, who opted out of the plan, according to Biogen director of public affairs Naomi Aoki. She noted that while the filing language indicates the plan is only for senior executive officers, in fact it is meant to meant to be used strategically for critical employees in all aspects of company operations—medical, scientific, operational, commercial.
“This is in response to continued shareholder activism,” she said, specifically citing “Carl Icahn’s actions and the impact that they could have on recruitment and retention going forward.”
The retention bonus is separate from the firm’s annual cash incentive plan, meaning employees could earn even higher percentages of their base pay when that is taken into account. Under the terms of the retention plan, the actual size of the bonuses will be based on whether the company meets the 2008 revenue and earnings per share goals (each count equally toward the bonus) spelled out in its cash incentive plan. “Depending on the Company’s performance against those goals, payments can range from 0% to 150% of the target bonus opportunity,” the 8-K filing said.
According to the filing, the program also contains a trigger clause that allows key personnel to receive the bonus if they lose their jobs involuntarily due to “corporate change in control or a corporate transaction.” Employees will apparently get the bonus if they are terminated before December 31, 2008, no matter how the company is doing. If they are terminated after that date, they would be entitled to the bonus they would have earned the following March under the terms of the retention plan.