You may recall my December post regarding Nuvelo(NUVO). The company reported that a pivotal trial for its lead compound, alfimeprase, had failed to meet its endpoints. On the release of this news, the stock fell 80%, and has continued to float downwards since.
Nuvelo began 2006 trading at $8.11 and quickly jumped above $17 when the company partnered with Bayer on alfimeprase. After December’s failed trial results, the stock closed the year at $4 and by February 7, has dropped to $3.33. For shareholders and the company, not a particularly good year.
The Board Of Directors, or at least the Compensation Committee appears to disagree. In an 8-K filed last week, the company reports:
On January 29, 2007, the Compensation Committee (the “Committeeâ€) of the Board of Directors of Nuvelo, Inc. approved the bonuses for Nuvelo’s named executive officers (as defined in Item 402(a)(3) of Regulation S-K) for fiscal year 2006. The bonuses awarded are weighted and based upon internal targets as determined by the Committee. For the 2006 fiscal year, the target bonus for Nuvelo’s Chief Executive Officer was 40% of his base salary, and for officers at the senior vice president level the target bonus was 35% of their base. The Committee is vested with the authority and discretion to increase or decrease the size of the bonus pool and actual bonus amounts based on its review of each individual’s performance and achievement of corporate goals. The Committee determined that for the 2006 fiscal year the bonus pool would be funded at 92% of its target level and the named executive officers would be awarded bonuses at between 100% and 140% of their target levels, after taking into account the 92% funding of the bonus pool.
The 2006 bonuses to Nuvelo’s named executive officers are as follows:
Ted W. Love, M.D., Chairman and Chief Executive Officer: $289,248
Michael D. Levy, M.D., Senior Vice President, Research and Development: $184,828
H. Ward Wolff, Senior Vice President, Finance, and Chief Financial Officer: $50,313
Lee Bendekgey, Senior Vice President and General Counsel: $126,449
Now, I understand that the company’s management and employees worked hard, and that sometimes the science just doesn’t work. But it seems rather unseemly for the compensation committee to conduct its review regarding the “achievement of corporate goals” in a year which saw the stock drop 50% and in which the value of the company’s pipeline evaporated and determine that top executives are entitled to bonuses of 100%-140% of their target levels.
One can only imagine what the bonuses would have been had the trial been successful.
Disclosure: I hold a position in NUVO