By Alan Prendergast
By Michael Roberts
By Michael Roberts
By Amber Taufen
By Patricia Calhoun
By William Breathes
By Michael Roberts
By Melanie Asmar
For starters, each of the officers would receive 100 percent company-paid health, dental and life-insurance benefits for two full years. Next, with the exception of Soll, each of the men would get a one-time lump payment equal to a year's salary. And finally, the October changes guaranteed that if an executive officer was terminated within twelve months of a change of control at Synergen, all his options to acquire stock in the company would become fully vested.
Two weeks later Synergen announced a whopping $47 million quarterly loss. A week after that, on November 17, Amgen announced that it was buying Synergen for $9.25 a share.
They lost their company, but Synergen's top executives are now millionaires.
According to SEC filings, Amgen's agreement with Synergen calls for stockholders to cash in their stocks and options within six months of the takeover--which means two weeks from now.
When he does (if he hasn't already), Abbott will enjoy a lucrative payday. Thanks to his contract and the October amendment, Abbott will receive three times his annual salary, or $750,000. Next, he cashes in his Synergen stock, about 61,000 shares that each fetch the $9.25 that Amgen paid as part of the takeover deal. That's another $564,000.
Finally, as a result of the repricing agreements and the company's deal to fully vest its employees' stock options, the former Synergen president and CEO gets to keep the difference between his drastically repriced options and their sale price to Amgen. That comes to a profit of $4.50 a share. With his approximately 178,000 options, that's another $1.29 million for Abbott.
All of which adds up to a goodbye deal of about $2.6 million for the CEO, who worked for Synergen for eight years.
Founder Soll makes out even better. Even though he was entitled to only two years' severance pay--or $300,000--in the event of "a change of control" at Synergen, he owned a considerable chunk of stock. In all, Soll checks out of the biotech business with a gold watch worth approximately $3.7 million. (Unknown is how much of his own money Soll spent to start the company fourteen years ago.)
Although Collins, Hirsch, Thompson and Young didn't do quite as well, each left Synergen with severance packages worth anywhere from $1.4 million (Collins) to $2.1 million (Thompson).
The former executives weren't willing to discuss their well-padded departures. Former CEO Abbott, who still maintains an office at Amgen, was in Spain last month, although a secretary said he was calling in for messages. Former Chairman Soll did not return several messages left on his home telephone answering machine. Arthur Hayes, a Synergen director who served on the compensation committee, did not return numerous messages left at his home and company in New York. And compensation committee chairman Glenn Utt, reached through Sugen Inc., another biotech company where he sits as a director, declined to comment, on the advice of his attorneys.
According to an annual survey of biotech executives conducted by BioWorld CEO Compensation Report of Atlanta, Synergen's executives worked for middling, even low salaries, by industry standards. And, while analysts acknowledge that the valuable going-away presents voted to Synergen's executives were generous, they say the packages were not outlandish for the business.
"From a philosophical standpoint, I'm opposed to golden parachutes," says John Clinebell, chairman of the University of Northern Colorado's finance department. "As a realist, though, I know that they're very common."
Indeed, perhaps the most interesting thing about how lucrative Synergen ended up being for its top officers--despite the company's evaporation--is how common such deals appear to be in the biotechnology industry.
When Amgen bought Synergen, it agreed to keep the company as a subsidiary for one year. At the end of 1995, Synergen Inc. will no longer exist. In the meantime, some of the company's products are still spilling out of the pipeline.
In addition to Antril, for instance, Synergen's labs had been investigating the possibilities of a drug called rhCNTF, which had shown some promise in the treatment of amyotrophic lateral sclerosis, or Lou Gehrig's disease.
Three months ago, however, rhCNTF met the same fate as Antril. In February, Synergen, now a division of Amgen, halted development of the drug. Results from the latest clinical trials showed that it performed no better than a placebo.
In late April the Denver Post published its annual listing of the region's hundred largest public companies, in which analysts evaluated the corporations' performances. Finishing dead last was Synergen. According to the analysts' calculations, an investor who bought $1,000 worth of Synergen stock at the end of 1992 would now have an asset worth a paltry $142.