Bristol-Myers Ousts Its Chief at Monitor's Urging

Lacey declined via e-mail to comment on his work as monitor. His intervention at Bristol comes as deferred prosecution agreements are becoming far more common.

Once a tool aimed primarily at keeping individual offenders on the straight and narrow, these agreements are now being used to resolve corporate cases in which government investigators think they have found serious wrongdoing but worry that a criminal indictment could put a large public company out of business.

Last month, the brokerage arm of insurance giant Prudential Financial Inc. signed a deferred prosecution agreement to resolve allegations that brokers in its Boston office helped big investors evade rules against short-term trading of mutual funds. Computer Associates International Inc., now known as CA, entered into a similar deal after its top executives were accused of criminal accounting fraud.

"The law on the books is so wooden. Prosecutors had a choice between prosecuting [entire corporations] for the sins of their employees and companies getting off scot-free," said Fordham University law professor Daniel Richman. Deferred prosecutions "really have created a third choice," he said.

Legal analysts said the leadership change at Bristol shows that prosecutors are serious about keeping the pressure on companies that have engaged in wrongdoing. "I see it as encouraging that we have monitors who are doing what they are supposed to do, which is rolling heads," said James D. Cox, a law professor at Duke University.

Although some analysts raised concern that federal prosecutors were getting involved in corporate governance, Samuel W. Buell, a law professor at Washington University in St. Louis, pointed out that when corporations are convicted of crimes -- as opposed to entering into a deferred prosecution agreement -- probation and monitoring are almost always part of the resulting sentence.

Robinson said Bristol's board had not discussed a severance package for Dolan, whose departure he described as "involuntary."

Cornelius, a former Eli Lilly & Co. executive who helped Guidant through a regulatory inquiry into malfunctioning heart defillibrators and a bumpy merger with Boston Scientific Corp., was upbeat on the conference call with reporters. "Our financial strength here at Bristol-Myers Squibb is outstanding," he said. "The new product pipeline is one of the best in the future that I've ever seen."

The stock market greeted the leadership change with enthusiasm. Bristol-Myers shares, which have lost more than half their value during Dolan's five-year tenure, closed at $24.32, up 93 cents, or nearly 4 percent.