SANOFI: a generous EUR six million “Golden Hello” for Olivier Brandicourt, a great pharmaceutical mercato

SANOFI has just released the conditions of employment of its new CEO, Olivier Brandicourt, and Proxinvest, the French partner of ECGS, was invited by the press to comment the news.

A welcome gift, or ‘Golden Hello’, partly conditional and paid over three years  and estimated by Proxinvest € 6 million was made to the signing of the contract that binds the former Executive Board member  and boss of the pharmaceutical division of German group Bayer to the French top pharma player Sanofi. The company also communicated the generous remuneration terms agreed with its new CEO: a EUR 1.2 million base salary, an annual bonus of up to 250% of the fixed plus the annual grant of 220,000 stock options and of 45,000 performance shares: an expectation, according Proxinvest for about EUR 6 million per year as estimated under the generous performance conditions generally used by Sanofi.

Olivier Brandicourt is the ideal boss to Sanofi:  a physician and biologist by training, Olivier Brandicourt, a specialist in infectious and tropical diseases, spend as intern eight years at the Pitié-Salpêtrière Hospital in Paris, in 1988 he joined the US laboratory Parke Davis, later bought by Pfizer and then joined Bayer in 2013 for which he bought a division of Merck and oncology laboratory Algeta … In short, a unique experience, the post was only waiting for this man.

What is however not clear in the Sanofi’s press release is that the ‘Golden Hello’ offered, we are told, to Olivier Brandicourt, is actually offered to Bayer as a compensation for the non-compete clause breached by Olivier Brandicourt. Because fact is that the contract of this “great man” forbade him to quit Bayer and join a competitor, and so he had, likely with the help of Sanofi, compromise on an indemnity paid probably by Sanofi to Bayer … why not between four to six million euros?

Proxinvest, who spoke with the Chairman Serge Weinberg, interim CEO since the dismissal of Chris Viehbacher by the Board at the end of October 2014, thinks it would be wise to explain the mechanics of such mercato dealings rather than to suggest that Olivier Brandicourt received millions without having worked a day for Sanofi.

This case is, for Proxinvest, remarkably illustrative of the current ”économie concentrationnaire”, according to Pierre-Henri Leroy words. Big pharmaceutical companies around the world pay huge salaries and practice an executive mercato perfectly comparable to the trade of football or basketball star players. The industry is very complex; it negotiates prices with Medicare authorities and is known for its generous margins: accordingly it pays very high salaries to its top managing directors and employees. The real cause behind these indecent salaries at the top is for Proxinvest in the selection of directors and the convenience of the financial system as a whole for these protected employees, these executives adored by our universal banks which are abnormally present in the investment industry. Actually the influence of investment banking is felt over the selection and remuneration of top executives at listed companies. A complication that points to a difficult but possible reform of the financial system in Europe …

Pending such a big reform, Proxinvest is left to recommend investors to oppose the up-coming non-binding vote on the compensation of Olivier Brandicourt, which is simply excessive, particularly in terms of the wage ceiling of 240 minimum wage (or 4, 8 million euros a year) as retained by Proxinvest for the best employed CEOs.


PARIS on February 24, 2015