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Hi-Tech Pharmacal shareholders OK sale of company, golden parachutes

Shareholders for Amityville-based Hi-Tech Pharmacal Co. overwhelmingly voted to approve the sale of the drugmaker, but a vote on executives' golden parachute packages was much closer.

More than 87 percent of all shareholder votes said yes to the $640-million sale of Long Island's sole public pharmaceutical company to another drugmaker, Lake Forest, Ill.-based Akorn Inc., with less than 1 percent against. (Some shareholders abstained from voting.)

Meanwhile, the company's top executives' compensation packages upon the sale saw only 45 percent of shareholders voting in favor, with 39 percent voting against the deal. The details of the votes were disclosed in a Dec. 19 regulatory filing.

The shareholders' vote on the severance package -- which was strictly advisory to the board, and not mandatory -- echoes an overall trend in recent mergers and acquisitions activity. While shareholders are enthusiastic about actual sales of companies, they are more hesitant about the executive pay related to the transactions.

Since 2011, median shareholder support for mergers was around 99 percent, compared to about 88 percent median support for golden parachute packages, according to a study by compensation consultancy Pearl Meyer & Partners, based in New York.

"Some people are cheap . . . I think it's human nature," said James Reda, an executive compensation consultant in New York, speaking of the proportion of Hi-Tech shareholder votes against the compensation package. "I don't think it necessarily means anything more than that, because that deal was more than reasonable."

Hi-Tech declined to comment on the shareholder vote. The sale is still expected to be completed in the first quarter of this year.

As part of the compensation package, Hi-Tech chief executive David Seltzer could receive nearly $85 million in the sale to Akorn. That would include $81 million from stock and vested options he already owns, $1.1 million from accelerating unvested stock options and $2.7 million in cash severance and other benefits, according to securities filings.

Shareholder votes on executive compensation and golden parachute packages, although nonbinding, have been mandated for public companies since 2011 as part of the Dodd-Frank financial regulation overhaul.

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