In an earlier post, I discussed the implications of Kenneth Frazier, CEO of Merck and former company general counsel, serving on the Board of Trustees of Penn State at the time of their recent coaching scandal:
In that post, I sumarized Mr. Frazier's career at Merck as follows: "So Penn State wants to put its investigation into the hands of a guy who first, did his best (in company with all the corporate leadership) to conceal the truth to assure that a favored brand continued to make profits; and second, once the truth came out, fought like heck to make sure that the human beings who were harmed by those corporate actions didn't get a penny. Sounds like a great plan to restore trust in the university."
The results of Frazier's leadership at Merck thus far have been roughly as follows, as nicely summarized by our good friend Roy Poses over at Health Care Renewal:
Frazier, he tells us, saved Merck megabucks by aggressively fighting all the Vioxx lawsuits. But Merck has since had to pay huge criminal fines for the way it marketed Vioxx, most recently, a $950M settlement. Merck stock has been in the doldrums as a result.
So how has Merck treated their CEO? According to Dr. Poses (quoting the Dow Jones News Service), "Merck & Co.'s ... leader received compensation valued at $13.3 million for 2011, up 41% from the year before, reflecting his ascension to the drug maker's top post and Merck's ability to exceed certain internal performance targets."
As Dr. Poses has gone blue in the face reminding his readers, this is the norm for corporate America nowadays. Companies are not run for the benefit of their customers, or even necessarily for the benefit of their shareholders, but for the benefit of their top executives, with the full complicity of pliant boards of directors. When this sort of thing happens in the less-developed countries, we call it corruption. As both Dr. Poses' and this site have also blogged about in the past, until individual execs start to suffer real consequences (like how about jail time) for serious misdeeds, we can expect this behavior to continue. (See for instance: http://brodyhooked.blogspot.com/2010/04/cnn-pfizer-too-big-to-prosecute-shadow.html)