|Conscience Is His Guidant
Dollens knows when to go
The heartache is over for
Johnson & Johnson
(JNJ - Get Report)
Only a week ago, the big medical device companies appeared well on their way to an ugly legal standoff. But on Tuesday, they came to terms on a
revised merger deal
that offers something for everyone. J&J gets a shot at new growth markets at a price it can stomach. Guidant shareholders get $21 billion in cash and stock, locking in gains of recent years. And Guidant chief Ron Dollens finally gets to retire in style.
Last December, when the companies first announced merger plans, J&J projected a third-quarter completion date. Dollens, who by then was looking to head off into the Indianapolis sunset, said he would retire at closing. "The complementary strengths of both firms ... should allow for a very smooth transition," Dollens said during a Dec. 16, 2004, conference call.
But the transition turned rough indeed after safety concerns pushed Guidant to recall a bunch of defibrillators and pacemakers. Those problems, and Guidant's handling of them, led to the last-minute wrangling that had J&J backing away from the table, and Guidant
suing its suitor.
Finally, this week the sides worked out a new agreement that's supposed to close in the first quarter of 2006, replete with a $4 billion haircut for Guidant shareholders. And this time around, Dollens is taking no chances. Rather than sticking around to sign all the papers at closing, he said Tuesday he'd step down immediately, to be succeeded on an interim basis by Chairman James Cornelius.
"I am confident that it is the proper time to pursue my previously announced retirement," Dollens said in a press release Tuesday morning. "I've been privileged to lead Guidant over the last 11 years and build a solid foundation of organic growth from innovation, global sales distribution capabilities, access to key markets and a dedicated leadership team."
Privilege sounds like the right word. As
The Indianapolis Star
pointed out last week
, Dollens' retirement promises to be a lavish affair. He and Cornelius managed to cash out $33 million worth of Guidant stock in April. They were aided by an unusual provision that vested their stock options upon shareholder approval, not at closing, as is the norm.
That little twist allowed Guidant's top two to sell their stock at $74 and change, a sight better than the $62.50 Guidant has been fetching lately. But then, we always knew having a dedicated leadership team would pay off.
Dumb-o-Meter score: 88. Only time will tell how many yachts Dollens and Cornelius can water ski behind.