GENETECH CHAIRMAN SWANSON’s $6.3 MIL. GOLDEN PARACHUTE
GENETECH CHAIRMAN SWANSON's $6.3 MIL. GOLDEN PARACHUTE does not include the $1.5 mil. sum he would receive as founder of the biotech firm. In a proxy/prospectus dated May 2 detailing the$2.1 bil. proposal for Roche to acquire 60% of Genentech, the golden parachutes for the company's executive are described as a "lump sum severance award equal to five times the sum" of each exec's compensation, "including salary and bonus." Swanson, 42, was salaried at $600,000 last year. Bonuses amounted to$348,455. Genentech President and CEO Kirk Raab, who was formerly president and chief operating officer, has an even richer severance package. Raab, 54, would be entitled to a golden parachute with a base of $6.6 mil. Payments to Senior VPs James Gower and William Young, VP and Chief Financial Officer Louis Lavignne and VP and General Counsel and Secretary John McLaughlin would be $2.4 mil., $2.2 mil.,$1.95 mil. and $1.98 mil., respectively, according to the filing. In addition to the multimillion dollar severance packages -- like all vested Genenrtech employees -- the company's five mostly highly paid executives are entitled to cash out their options on an accelerated schedule. Swanson stands to make an extra $4.2 mil.; Raab more than $7.9 mil.; the other three have options worth $1.6 mil. $2.4 mil. Genentech also has agreed to pick up the $115 mil. cost of employees cashing in their options. Under the proposed deal, Genentech employees can cash out on 25% of their stock options that have not fully matured. In preparation for a June 8 meeting at which shareholders will vote on the proposed deal with Roche, Genentech disclosed in the filing that it is cooperating with an SEC investigation into insider trading of Genentech securities. The company said "it understands that a focus of the inquiry involves certain communications between the wife of G. Kirk Raab and a member of her family prior to the public announcement of the merger and subsequent trading in Genentech securities by persons other than Mrs. Raab." The investigation has been going on since the Roche-Genentech merger proposal was announced Feb. 2 and ("The Pink Sheet" Feb. 5, p. 3) reportedly was triggered by an unusually high volume of trading in call options of Genentech stock (options to buy stock at a fixed price) on the Pacific Stock Exchange.
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