Call it a rite of spring. Every year about this
time, FiercePharma takes a look at executive
compensation in the industry, and we rank the highest-paid CEOs. If you're a
regular reader, you'll notice that this year's list is longer than previous
editions. And there's a reason for that: curiosity.
As we were beginning to gather
numbers from biopharma companies' proxy statements and annual reports, news
surfaced that Valeant Pharmaceuticals ($VRX) and Actavis ($ACT) had been in merger talks. The former CEO of Mylan ($MYL), one of Actavis' rivals, regularly appeared on our highest-paid executives
list, so we looked up the numbers on Actavis. No dice; CEO Paul Bisaro may have pulled off his biggest merger ever last year, but $8.66 million
in compensation still didn't qualify him for our ranking.
Then, we pulled out Valeant's
proxy statement. And while CEO Michael Pearson didn't earn enough in 2012 to make the cutoff--his compensation just
surpassed $6 million--he should have been at the top of the list last year.
Pearson's 2011 pay package broke $36 million. He collected more than $18
million in stock and option awards, plus a special $13.7 million dividend
payment, stemming from agreements negotiated years before.
We hate to miss a scoop.
Naturally. So, we vowed to avoid making the same mistake this time around.
Rather than limit our executive-pay search to the biggest pharma companies and
biotechs, plus the usual suspects who often make CEO-pay rankings, we used a
bigger net. We collected compensation information from 50 companies, including
numbers for CEOs, CFOs, R&D chiefs and other top executives.
Partly because of this search,
but mostly because of big bonuses and awards at fast-growing Regeneron ($REGN), we have a brand-new No. 1 on our list. That's Regeneron CEO Leonard Schleifer, whose 2012 compensation totaled $30.047 million. You'll
notice some other newbies, such as Leonard Bell from Alexion ($ALXN), whose pay bump put him in 12th place. And then there are familiar faces,
such as Pfizer ($PFE) CEO Ian Read; Johnson & Johnson's ($JNJ) former chairman and CEO, William Weldon; and Eli Lilly ($LLY) CEO John Lechleiter, who hung on in 10th place.
Many of the companies we
researched pay their top people far less than the $10 million that served as
our cutoff figure. Novo Nordisk ($NVO) CEO Lars Sorensen, who has presided over double-digit growth there for several years,
collected a package of cash and stock awards worth about $5 million for 2012.
GlaxoSmithKline ($GSK) CEO Andrew Witty made less than $6 million himself; he took a pay cut for the year because
of Glaxo's shortfall on certain performance targets.
And then there are others who
would have made the list, had their titles been different. There's Regeneron
R&D chief George Yancopoulos, whose extraordinary $81 million in compensation shows how much the
company appreciates its newly minted blockbuster, Eylea. There's Mylan Chairman Robert Coury, who used to be a fixture on our list until Heather Bresch took over as
CEO; he made more than $28 million last year. Novartis' ($NVS) former chairman Daniel Vasella could have qualified for 12th place with his $13.98 million in
compensation.
Vasella, then, gives us a
quick segue to the ongoing debate over executive pay. In Switzerland, populist
dismay at some high-profile compensation figures led to a public vote earlier
this year. Citizens voted in new restrictions on common bonuses, such as golden
parachutes, and gave shareholders a binding vote on executive pay. And local
analysts figure that late-breaking news of Vasella's behind-the-scenes
noncompete agreement--worth some $78 million over 5 years--helped pay activists
to get out the vote. (Vasella ended up refusing the deal, by the way.)
In the U.S., where executives
are paid more than anywhere else in the world, shareholders at some companies
have successfully lobbied for a greater emphasis on performance pay and against
extraordinary bonuses, such as change-in-control payments that send top
executives on their way with tens of millions after a merger. Other companies
have instituted "say-on-pay" advisory votes for shareholders, but
those often end up as rubber stamps for the status quo.