Alex Philippidis Senior News Editor Genetic Engineering & Biotechnology News
These 18 top dogs have got it good.
As Mel Brooks has said, “It’s good to be the king!” How good is it to be a CEO? You know what the top 10 biopharma CEOs are making; now, here is a list of 18 CEOs of biopharma giants sorted alphabetically, with details of their perquisites and compensation in 2012 not related to salary, stock, incentive payments, or retirement plans, as disclosed by the companies in annual reports and/or other regulatory filings with the U.S. Securities and Exchange Commission (SEC). CEOs are listed by total 2012 compensation, the top three elements of that compensation, and the figure for “all other” compensation listed by the companies, which often includes disclosures on perquisites.
Bristol-Myers Squibb CEO
Perks and “all other” compensation: $818,078, all of it consisting of company contribution to savings plans. In its Proxy Statement for 2012, BMS said it “generally does not provide perquisites” to named executive officers, and had not done so last year with one exception, an executive vice president.
Total 2012 compensation: $17,201,980
Top three elements: Stock awards, $9.722 million; Non-equity incentive plan compensation, $3.845 million; Salary, $1.623 million
Amgen, president and CEO effective May 23, 20121
Perks and “all other” compensation: $420,059, consisting of $ 288,589 in company credits to supplemental retirement plan; $25,000 in company contributions to supplemental retirement plan; and “Perquisites and Other Compensation” totaling $106,470:
- $65,009: Personal use of company aircraft
- $17,805: Personal expenses on business travel
- $15,000: Personal financial planning services, including tax preparation services
- $4,256: Personal use of company car and driver
- $2,564: Expenses related to guests accompanying Bradway on business travel
- $1,836: Other expenses include gifts, the cost of executive physicals and personal transportation related costs
Total 2012 compensation: $13,570,091
Top three elements: Stock awards, $8.572 million; Non-equity incentive plan compensation, $3.316 million; Salary, $1.262 million
AstraZeneca, CEO and director through June 1, 2012
Perquisites and “other” compensation detailed within “Benefits” of £252,000 ($387,053)2 reported for 2012. The sum includes:
- Up to £120,000 ($184,363): Allowance for relocation costs
- £86,000 ($132,133): Cash paid in respect of dividends accrued on Ordinary Shares which vested in 2012, having been deferred in 2009 due to Brennan’s receiving an annual bonus awarded for performance in 2008
- £17,000 ($26,119): Allowance for professional fees (legal and pensions advice in connection with Brennan’s retirement)
- £13,000 ($19,975): Car allowance
- £16,000 ($24,583): “Other benefits including healthcare insurance.”
Total 2012 compensation: £3.232 million ($4.973 million)
Top three elements: AstraZeneca performance share plan, £1,577 million ($2.426 million)3; Pay in lieu of notice, £914,000 ($1.406 million)4; Base salary, £499,000 ($767,758)
Kenneth C. Frazier
Merck & Co., chairman, president, and CEO
Perks and “all other” compensation: $56,374 in 2011 (2012 data unavailable at deadline), consisting of:
- $35,349: Company car and driver
- $11,025: Savings Plan company match
- $10,000: Financial/Tax counseling and tax preparation services
- $0: Other available perquisites, including company aircraft, personal security and home security monitoring system, relocation expenses, termination-related payments, and executive life insurance
Total 2011 compensation (2012 data unavailable at deadline): $13,347,652, of which $510,000 of $1.5 million base salary was deferred
Top three elements: Stock awards, $3.108 million; Non-equity incentive plan compensation, $3.097 million; Option awards, just under $3 million
Richard A. Gonzalez
AbbVie, chairman and CEO5
Perks and “all other” compensation: $449,288, consisting of:
- $154,681: Earnings, fees and tax payments for non-qualified defined benefit and non-qualified defined contribution plans
- $294,607: Non-business related flights
Total 2012 compensation: $7,949,2175
Top three elements: Stock awards, $3.342 million; Non-equity incentive plan compensation, $2.5 million; Salary, $863,942
Johnson & Johnson, chairman/CEO effective April 26, 2012
Perks and “all other” compensation: $159,774, including $48,923 in registrant contributions to defined contribution plans; $6,960 in tax reimbursements6; $5,829 in insurance premiums; and “Perquisites and other personal benefits” totaling $98,062:
- $51,706: car and driver for commutation and other personal transportation
- $34,659: personal use of the corporate aircraft
- Undisclosed: Home security monitoring fees—a portion of the $11,697 difference between reported $98,062 for “perquisite and other personal benefits” and the costs of corporate aircraft and car and driver
Total 2012 compensation: $10,977,109
Top three elements: Non-equity incentive plan compensation, $3.407 million; Stock awards, $2,790,229; Change in pension value and non-qualified deferred compensation earnings, $2.05 million
Perks and “other benefits”: CHF 128,734 ($138,274), including unspecified “perquisites and other compensation valued at market price.”7
Total 2012 compensation: CHF 13,228,188 ($14,207,321)
Top three elements: Equity plan “select” shares, CHF 4.796 million ($5.151 million); Long-term performance plan, CHF 4.747 million ($5.098 million); Base compensation, CHF 2,025 million ($2.175 million)
John C. Lechleiter, Ph.D.
Eli Lilly & Co., chairman, president, and CEO
Perks and “all other” compensation: $90,000, consisting entirely of company match for each individual’s 401(k) plan contributions. “Perquisites and other personal benefits” totaled zero8
Total 2012 compensation: $14,620,633
Top three elements: Stock awards, $5.625 million; Increase in pension value, $4.424 million; Non-equity incentive plan compensation, $2.982 million
John C. Martin
Gilead Sciences, chairman and CEO
Perks and “all other” compensation: $7,500, which includes matching contributions made by the company on Martin’s behalf to the 401(k) employee savings and retirement plan. “Currently, perquisites and other personal benefits are not a significant component of our executive compensation program,” Gilead stated in its proxy statement, filed March 20 with the SEC.
Total 2012 compensation: $15,257,272
Top three elements: Option awards, $5.433 million; Stock awards, $4.947 million; Non-equity incentive plan Compensation, $3.375 million
Robert L. Parkinson, Jr.
Baxter International, chairman and CEO
Perks and “all other” compensation: $9,012, reflecting in part $7,500 in 401(k) contributions. Company said its “limited range of perquisites” for named executive officers included “limited personal travel on company aircraft,” and an annual physical exam. “In 2012, the aggregate incremental cost associated with providing these perquisites was less than $10,000,” Baxter stated in its Proxy Statement, filed March 22.
Total 2012 compensation: $17,521,770
Top three elements: Stock awards, $6.348 million; Non-equity incentive plan compensation, $4.279 million; Option awards, $3.923 million
Pfizer, chairman and CEO
Perks and “all other” compensation: $409,892, consisting of $224,438 in company matching contributions to its Savings Plan and Supplemental Savings Plan; and “Incremental Cost of Perquisites” totaling $174,204, including:
- $108,364: Company aircraft usage
- $48,085: Car usage with driver
- $10,000: Financial counseling services: Taxable allowance of up to $10,000 per year, which may include tax preparation and estate planning services
- $7,476: Home security systems: Available to Read and other ELT members. The cost of any such systems is imputed as income to the recipients, as required
- $279: Personal benefits provided in association with business travel
- Unspecified: Tickets: Season and other tickets to sporting, cultural and other events for use in connection with its business. On occasion, these tickets are provided to employees, including ELT members, and non-employee directors for personal use. There is no incremental cost associated with such tickets or other items
Total 2012 compensation: $25,634,136
Top three elements: Change in pension value and non-qualified deferred compensation earnings, $7.147 million; Option awards, $6.498 million; Stock awards, $6.442 million
Perks and “all other” compensation: No separate line, but 2012 Annual Report discloses that total 2012 compensation includes:
- CHF 30,000 ($32,282): Annual expense allowance
- CHF 10,335 ($11,121): Payments for tax consulting services, excluding employer contribution to Swiss social security programs AHV/IV/ALV, providing retirement, disability and unemployment benefits
Total 2012 compensation: CHF 12,537,385 ($13,490,851)
Top three elements: Salary, CHF 4 million ($4.304 million); Stock-settled stock appreciation rights, CHF 4 million; non-voting equity securities subject to 10-year blocking period, CHF 2.513 million ($2.704 million)
Kevin W. Sharer
Amgen, CEO through May 23, 2012; chairman through December 31, 2012
Perks and “all other” compensation: $1.357,579, consisting of $726,414 in company credits to supplemental retirement plan; $25,000 in company contributions to supplemental retirement plan; and “Perquisites and Other Compensation” totaling $606,165:
- $261,712: Personal use of company aircraft
- $20,346: Personal use of company car and driver
- $15,040: Expenses related to guests accompanying Sharer on business travel
- $15,000: Personal financial planning services, including tax preparation services
- $23,346: Personal expenses on business travel
- $270,721: Other expenses include gifts, the cost of executive physicals, and personal transportation-related costs
The $270,721 includes the aggregate incremental cost of providing Sharer with the following benefits following his retirement as CEO:
For secretarial, information technology and travel support—approximately:
- $140,000 for the estimated cost of providing Sharer with a secretary and travel support from January 1, 2013, through December 31, 2017
- $2,000 for the estimated cost of providing Sharer with information technology support from January 1, 2013, through December 31, 2017
- $23,000 for the cost of providing Sharer’s secretary with a home office and
- $92,927 for the cost of providing secretarial, information technology, and travel support during 2012, unrelated to Sharer’s services as an employee during that period
2012 total compensation: $9,128,712
Top three elements: Stock awards, $3.657 million; Non-equity incentive plan compensation, $2.308 million; Salary, $1.806 million
AstraZeneca, CEO effective October 1, 2012
Perks and “other” compensation: No details furnished
Total 2012 compensation: £3.693 million ($5.682 million)2
Top three elements: Award of restricted shares, £2 million ($3.077 million)9; Benefits £1.017 million ($1.565 million)10; Annual bonus for performance during 2012 of 122% of base salary out of a maximum possible award of 180%, £335,000 ($515,410)11
Perks and “other” compensation: Reported in 2012 Annual Report as “Benefits in kind,” €4,051 ($5,310), which “relates principally to a company car.”
Total 2012 compensation: €7,481,151 ($9,806,131)2
Top three elements: Variable compensation, €2.28 million ($2.973 million); Stock options awarded, €2.021 million ($2.649 million); Performance shares awarded, €1.938 million ($2.541 million)
Johnson & Johnson, CEO until April 26, 2012, and chairman until December 28, 2012
Perks and “all other” compensation: $234,688, consisting of $ 59,426 in registrant contributions to defined contribution plans; $5,516 in tax reimbursements6; $1,447 in insurance premiums; and “perquisites and other personal benefits” totaling $168,299:
- $127,901: Personal use of the corporate aircraft
- $39,688: Car and driver for commutation and other personal transportation
- Undisclosed: Home security monitoring fees—a portion of the $710 difference between reported $168,299 for “perquisite and other personal benefits” and the costs of corporate aircraft and car and driver
Total 2012 compensation: $29,838,259
Top three elements: Non-equity incentive plan compensation, $13.448 million; Stock awards, $7.565 million; Option awards, $4.020 million
Miles D. White
Abbott Laboratories, chairman and CEO
Perks and “all other” compensation: $869,713, consisting of
- $392,759 in earnings, fees and tax payments for non-qualified defined benefit and non-qualified defined contribution plans
- $213,435: Non-business related flights
- $168,519: Security costs
- $95,000: Employer contributions to defined contribution plans
- Also, White was also eligible as CEO for up to $10,000 of annual costs associated with estate planning advice, tax preparation and general financial planning fees. Benefit not used in 2012
Total 2012 compensation: $25,118,836
Top three elements: Stock awards, $9.429 million; Change in pension value and non-qualified deferred compensation earnings, $6.163 million; Non-equity incentive plan compensation, $4.7 million
Sir Andrew Witty
Perks and “other benefits”: £49,000 ($75,390), “including healthcare, car, personal financial advice, life assurance and matching shares under the ShareReward Plan.12
Total 2012 compensation: £3.892 million ($5.988 million)2
Top three elements: Performance share plan, £1.78 million ($2.739 million); Salary, £1.033 million ($1.589 million); Annual bonus, £905,000 ($1.392 million), of which Witty deferred 50% or £452,000 ($695,423)
Under SEC Rules, companies are required to identify by type all perquisites and other personal benefits for a named executive officer, but only if the total value for that individual equals or exceeds $10,000. Companies are also required to report and quantify each perquisite or personal benefit that exceeds the greater of $25,000 or 10% of the total amount of perquisites and other personal benefits for that individual.
As a result, U.S. companies were free to not disclose many of the perks enjoyed by CEOs, though many did so despite the amounts falling below reporting minimums. The perks of CEOs generally included car and plane travel, health, and life insurance, home security systems, and in at least one company listed below, occasional tickets to sporting and cultural events. As shareholders increasingly scrutinize the expenses of their invested public companies, CEOs will be challenged in coming years to offer fuller disclosure and justification of those benefits, which in many cases are greater in value and luxury that what their employees might be offered. One company listed below ended non-relocation related tax reimbursement this year—a small but telling sign that shareholders are watching CEO perks more closely than before.
However, absent an equivalent of the SEC’s rules, companies headquartered outside the U.S. generally disclosed less detail on the perquisites of their CEOs, making comparisons of the perks bestowed on U.S. and non-U.S. CEOs difficult at best. One exception was AstraZeneca’s disclosure for retired CEO David Brennan, details of which are included in this list, though AZ included the information as part of its Form 20-F, a filing required of non-U.S.-headquartered companies.
1 Has since taken on the additional position as chairman, effective January 1, 2013.
2 Figures converted to USD via XE (www.xe.com) on April 11, 2013.
3 Reflects £1.355 million ($2.054 million) estimated market of ordinary shares that vested in March 2013 from the 2010 PSP award, pro-rated from May 7, 2010, to June 30, 2012, when his employment officially ended; plus £222,000 ($341,566) cash payable upon the vesting of the 2010 PSP award. AZ’s Remuneration Committee determined that the share awards made to Brennan in 2011 and 2012 should be forfeited.
4 On leaving the Company at a date determined by the Board, Brennan received a lump sum payment in lieu of contractual notice, representing 11 months’ base pay.
5 Gonzalez’ appointment to head AbbVie was announced in October 2011. His 2012 compensation reflects position as executive vp of the Pharmaceutical products group of Abbott Laboratories, from which AbbVie was spun out on January 2.
6 Reimbursements are for use of company aircraft or company cars by family members when accompanying a named executive officer on business travel, as well as for use of company car for commutation purposes. As of this year, J&J’s compensation committee discontinued all non-relocation related tax reimbursement for executive officers.
7 According to its Form 20-F for 2012, “Novartis may provide other benefits in a specific country according to local market practice and regulations, including length-of service awards and perquisites.” Perquisites were not specified.
8 “The company does not allow personal use of the corporate aircraft except the aircraft is made available for the personal use of Dr. Lechleiter when the security and efficiency benefits to the company outweigh the expense. Dr. Lechleiter did not use the corporate aircraft for personal flights during 2012, nor did he receive any other perquisites,” Eli Lilly stated in its Proxy Statement, filed March 25, 2013.
9 Award of 69,108 Restricted Ordinary Shares granted October 26, at 2894 pence per share, “by way of compensation for the loss of long-term incentives from his previous employer.”
10 Benefits include £991,000 ($1.525 million) cash “to compensate Mr Soriot in respect of his forfeited bonus opportunity for 2012 from his previous employer [Roche], paid at his previous employer’s target bonus rate and pro-rated from 1 January 2012 to 30 September.” After paying income tax, Soriot must invest the rest of the cash in AstraZeneca shares. The remaining £26,000 ($40,003) in benefits is cash owed to Soriot after his selection of benefits within the Company’s U.K. flexible benefits program.
11 Pro-rated from October 1 to December 31 to reflect the date of Soriot’s appointment as CEO.
12 GSK’s ShareReward Plan, open to all U.K. employees, allows participants to contribute up to £125 ($192) a month from their gross salaries to purchase GSK shares, with the company matching the number of GSK shares bought each month. Sir Andrew Witty contributed £125 a month to buy shares under the ShareReward Plan in 2012, which would amount to £1,500 ($2,308) for the year.