Consumer Group Demands Merck Disclose Amount of Executive Payouts;

Published on

Golden Parachutes Cost Seniors & Patients in Higher Drug Prices

A consumer group demanded today that pharmaceutical giant Merck disclose how much money it plans to pay top executives if the company is taken over and how those payouts will affect prescription drug prices. The Foundation for Taxpayer and Consumer Rights called on the Federal Trade Commission and company shareholders to require Merck to disclose the total cost of the planned payout.

The executive compensation plan comes as Merck stock plummets and a buyout becomes more likely in the wake of the removal of Merck’s top-selling arthritis medication, Vioxx, from the market following studies showing patients taking the drug had higher incidence of heart attacks and other medical problems.

“The public and shareholders have a right to know how drug prices and stock values will be affected by golden parachutes for company executives. At a time when 1 out of 4 seniors must choose between buying medications and paying for food and rent, it is unconscionable that a drug company would reward executives that allowed a dangerous drug to go to market,” said Jerry Flanagan of the Foundation for Taxpayer and Consumer Rights which recently organized two chartered train trips taking seniors to Canada to buy lower cost medications. For more information visit

Drug companies often blame high research and development (R&D) costs as the driving force behind double-digit annual increases in drug expenditures. However, data shows that drug companies spend twice as much money or more on salaries, marketing and profit than they do on developing new drugs. For example, in 2003, Merck recorded revenue of $22.5 billion. Of this, it spent $3.2 billion (14% of revenue) on research and $6.4 billion (28% of revenue) on marketing. After other charges and taxes, the company still recorded a profit of $6.8 billion (30% of revenue).

The executive payout plan will award 230 executives with a cash payment equivalent to 1.5 to 3 times their annual salary and bonuses if the company is taken over and the executives quit or are fired within two years of the takeover. Though Merck did not disclose the cost of the executive payouts, industry analysts expect it to total hundreds of millions of dollars.


The Foundation for Taxpayer and Consumer Rights is a non-partisan and non-profit consumer advocacy organization. For more information, visit us on the web at

Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

Latest Videos

Latest Releases

In The News

Latest Report

Support Consumer Watchdog

Subscribe to our newsletter

To be updated with all the latest news, press releases and special reports.

More Releases