Allergan to Enrich "Let Go" Executives Further

Bloomberg reported:

Three days before Allergan Plc announced a $160 billion deal with Pfizer Inc. last year, its board sent a message of reassurance to its executive team: if you’re let go after the acquisition closes, we’ll cover the tax bill for your severance packages.

As a result, Allergan could end up reimbursing its five top managers as much as $86 million for taxes they’d have to pay on top of ordinary income taxes if they aren’t offered jobs in the combined company.

The tax reimbursements would come on top of exit packages worth a combined $300 million for the five executives if they were let go.

Allergans top brass had this to say about employees in their Q1 2015 earnings call:

I am so proud of each of the people on our combined global team. One thing is clear: this combined team rallies quickly around surprising opportunities, focuses on the key objectives and executes flawlessly. When it comes to execution, we are like a finely tuned, high-performance engine.

I would just, again, close with saying that this team has continued to take bold and decisive action to create value. 

The "value" employees created will accrue to top executives in an inordinate manner by the board's action.  Top executives are in a class by themselves, distinguished by greed.

The New Yorker offered:

All things considered, it’s hard to avoid seeing the merger proposal as a cynical move designed to boost Pfizer’s stock price and generate a windfall for the company’s senior managers, who are compensated mainly in equity.

At the JP Morgan Healthcare Conference on 1-12-2016 top brass said the deal was about growth and efficient capital allocation around the globe.  Allergan's tax bill alleviating separation deal efficiently allocates millions in capital to executives no longer employed after the merger.  But alleviating taxes is the basis for the deal.  Companies and executives hate paying taxes.  Only the little people pay in our PEU world.