Cima pact with ex-CEO pays him despite taking new job
Susan Feyder, Star Tribune
[Not directly related to Cephalon, but on interesting article on what goes on at CIMA. I guess the current situation will make the CIMA BoD even less inclined to entertain the offer made by CEPH. On the other hand - will the CIMA board be able to survive?]
Published August 27, 2003 CIMA27
The compensation agreement of retired Cima Labs Inc. CEO John Siebert, a vocal supporter of Cima's widely criticized plan to be acquired by aaiPharma Inc., was modified just weeks before he and other Cima directors approved the deal this summer.
According to documents filed this month with the Securities and Exchange Commission, Siebert's employment agreement was revised in July to allow him to continue collecting his salary and benefits at Cima until year's end, even though in May he became CEO of CyDex Inc., a Kansas pharmaceutical company.
Under terms of a previous employment agreement, Siebert could have lost his Cima pay if he took another job.
The new agreement acknowledges that Siebert has a "relationship" with CyDex but says it won't be considered "employment" until the end of this year. The agreement calls for Cima to keep paying Siebert his annual base salary of $336,544 plus unspecified benefits until the end of 2003.
Siebert is Cima's largest individual stockholder, with about 200,000 shares. Although his role with Cima has been unspecified since he retired as CEO in April, he traveled with Cima and aaiPharma officials earlier this month to drum up support for the merger with analysts and money managers, many of whom have said the deal undervalues Cima shares.
Jim Hawley, Cima's chief financial officer, on Tuesday described Siebert's new role as a "consultant" to CyDex. But CyDex has said that Siebert is its president, CEO and a director and that he plans to relocate to the Kansas City area.
Siebert was at his office at CyDex headquarters in Overland Park, Kan., on Tuesday and could not be reached for comment.
Siebert's employment agreement at Cima was revised several months after he and interim CEO Steven Ratoff began discussing a possible merger with aaiPharma CEO Philip Tabbiner. Siebert's new agreement was finalized about a month after a board meeting at which director Terry Glarner, a Twin Cities venture capitalist and director since 1990, raised questions about the deal. Glarner was the only director who did not approve the merger. Siebert and Ratoff, who would become vice chairman of the merged company, were among the five directors who approved the deal.
Two Twin Cities money managers who have criticized the merger proposal expressed concerns Tuesday over the change in Siebert's employment terms.
Jim Concidine, a longtime holder of Cima shares, said that the revision helps explain "why Siebert was so enthusiastic about this deal."
Matt Arens, senior research analyst with Kopp Investment Advisors, said his firm doesn't want to see "any parties with conflicts of interest" play a part in deciding whether Cima should be acquired.
Last week, Cima received a competing acquisition offer from another drug company, Cephalon Inc. of West Chester, Pa. Cima has said it will consider the offer. |
