8-KMaterial AgreementsOther EventsExhibits & Filings

BRISTOL MYERS SQUIBB CO 8-K Report, Material Agreement (Nov 3, 2006)

Filed November 3, 2006For Securities:BMYCELG-RIBMYMP

Summary

This 8-K filing from Bristol-Myers Squibb Company (BMY), dated November 3, 2006, primarily details material definitive agreements related to executive departures and appointments. The most significant event reported is the formalization of severance and benefit packages for former CEO Peter R. Dolan following his departure on October 31, 2006. The filing outlines substantial payments, accelerated stock option vesting, and continued benefits for Mr. Dolan, in exchange for a comprehensive release of claims and non-compete/non-solicitation agreements. Additionally, the report details the compensation package for the newly appointed Interim CEO, James M. Cornelius. This includes a base salary, bonus structure tied to performance and tenure, and stock options. The filing also addresses the severance for former Senior Vice President and General Counsel, Richard K. Willard. These executive compensation and separation details are critical for investors to understand the financial implications of leadership changes and the terms governing these transitions.

Key Highlights

  • 1Bristol-Myers Squibb (BMY) formalized severance and benefits for former CEO Peter R. Dolan upon his departure on October 31, 2006, through a "Dolan Letter" dated November 1, 2006.
  • 2Mr. Dolan is entitled to $1,237,981 in cash severance, subsidized medical and life insurance for 51.5 weeks, and pension benefits valued at approximately $9.48 million.
  • 3Significant stock-related benefits for Mr. Dolan include accelerated vesting and extended exercise periods for over 3 million stock options, vesting of 81,013 restricted shares, and potential pro-rata distributions from long-term performance awards.
  • 4Mr. Dolan will serve as a consultant to the CEO for $50,000 per month until April 30, 2007, and has agreed to a one-year non-compete and non-solicitation clause.
  • 5James M. Cornelius was appointed Interim CEO and will receive an annual base salary of $1,250,000, with a target annual bonus of 170% of his base salary.
  • 6Mr. Cornelius will be granted a stock option to purchase 360,000 shares, with vesting tied to his tenure as interim CEO and the appointment of a successor.
  • 7Richard K. Willard, former SVP and General Counsel, received $1.428 million in gross cash severance and had all stock options and awards lapse upon his departure on September 28, 2006.

Frequently Asked Questions

The direct financial impact includes $1,237,981 in cash severance, plus significant costs associated with subsidized benefits and the estimated present value of pension benefits ($9.48 million). Additionally, there are costs related to accelerated stock option vesting and the consulting agreement. The exact total cost is complex due to the valuation of stock awards and pension liabilities.

Mr. Dolan agreed to release any claims against the company, not to compete with BMY for one year, not to solicit company employees for one year, not to assist any company seeking to acquire BMY for one year, and to maintain confidentiality. He also agreed not to disparage the company for three years and to cooperate with any investigations.

Mr. Cornelius receives a $1,250,000 base salary, a target annual bonus of 170% of his base salary (guaranteed for six months under certain conditions), and a stock option for 360,000 shares with time-based vesting. He also receives benefits such as use of a leased apartment, company aircraft, and car/driver.

Yes, Mr. Dolan will forfeit his severance payments and related benefits if the Board of Directors determines he engaged in willful misconduct or activity detrimental to the company's interests during his employment.