Alex Philippidis Senior News Editor Genetic Engineering & Biotechnology News
Find out how good it is to be the king.
Mark Zuckerberg articulated the breakneck-speed culture of Facebook’s startup days when he said a decade ago, “Move fast and break things. Unless you are breaking stuff, you are not moving fast enough.” CEOs are indeed good at breaking things—especially the proverbial bank, judging from this year’s list of 24 CEOs of biopharma giants.
The 24 are sorted alphabetically, with details of their perquisites and compensation in 2013 not related to salary, stock, incentive payments, or retirement plans, as disclosed by the companies in proxy statements and annual reports filed with the U.S. Securities and Exchange Commission (SEC). CEOs are listed by total 2013 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
Total 2013 compensation: $20,847,746
Top three elements: Stock awards, $14,586,898; nonequity incentive plan compensation, $3,799,913; salary, $1,686,539
All other compensation: $774,396, all of it consisting of company contribution to savings plans. With one exception, a former executive vice president, “We did not provide perquisites and other personal benefits to any other named executive officer that were not otherwise available to all salaried employees,” the company stated in its proxy statement for 2013, adding: “We generally do not provide executive perquisites.”
Amgen, Chairman of the Board, CEO and President
Total 2013 compensation: $13,649,807
Top three elements: Stock Awards, $7,999,917; nonequity incentive plan compensation, $3,598,000; salary, $1,490,769
All other compensation: $561,121, consisting of $454,177 in company credits to supplemental retirement plan; $25,500 in company contributions to 401(k) retirement and savings plan; and “Perquisites and Other Compensation” totaling $81,444:
- $52,653: Personal use of company aircraft1
- $15,000: Personal financial planning services, including tax preparation services
- $6,357: Personal use of company car and driver
- $4,800: Company contribution to nonprofit charities designated by Bradway
- $2,634: Other expenses, including the cost of executive physicals, expenses related to guests accompanying Bradway on business travel, and gifts
Marijn Dekkers, Ph.D.
Bayer, Chairman of the Board of Management
Total 2013 compensation: $6,617,388 (€4.832 million)
Top three elements: Long-term variable cash compensation based on virtual Bayer shares, $2,098,063 (€1.532 million); short-term variable cash compensation, $2,098,063 (€1.532 million); fixed annual compensation, $1,844,707 (€1.347 million)
Fringe benefits: $53,410 (€39,000), which “mainly includes perquisites such as a company car with driver or the use of the company carpool, payments toward the cost of security equipment, and the reimbursement of the cost of annual health screening examinations,” Bayer stated in its Annual Report 2013.
Total 2013 compensation: $5,083,629 (€3,712,158)2
Top three elements: Base salary, $1,862,544 (€1,360,025); long-term incentives, $2,167,933 (€1,583,019); short-term incentive (bonus), paid in 2014 and relating to the financial year 2013, $1,053,297 (€769,115)
Other components: $3,077,871 (€2,247,453); includes cost of pension, insurance coverage and monetary value of other fringe benefits, including $2,210,127 (€1,613,829) retirement benefit. “Executive Committee members are also provided with certain executive perquisites such as a company car and other benefits in kind,” according to UCB.
Kenneth C. Frazier
Merck & Co., Chairman, President, and CEO
Total 2013 compensation: $13,375,935
Top three elements: Stock awards, $5,105,338; option awards, $3,999,998; nonequity incentive plan compensation, $1,620,000
All other compensation: $232,825, consisting of $179,740 in savings plan company match and credits, as well as:
- $37,955: Company car and driver
- $10,000: Financial/tax counseling & tax preparation services
- $5,130: Installation and maintenance of home security monitoring system
Richard A. Gonzalez
AbbVie, Chairman of the Board and CEO
Total 2013 compensation: $18,176,794
Top three elements: Stock awards, $9,246,994; option awards, $3,616,574; nonequity incentive plan compensation, $3,300,000
All other compensation: $471,614, including $73,532 in earnings and pre-2013 tax payments for nonqualified defined benefit and nonqualified defined contribution plans; $75,000 in employer contributions to defined contribution plan, and other compensation that includes:
- $297,342: Nonbusiness-related air travel
- $18,240: Cost of providing a corporate automobile less the amount reimbursed by the named executive officer
- $7,500: Financial planning
Johnson & Johnson, Chairman/CEO
Total 2013 compensation: $16,910,960
Top three elements: Stock awards, $5,988,975; nonequity incentive plan compensation, $4,867,361; option awards, $2,669,999
All other compensation: $191,779, including $65,423 in registrant contributions to defined contribution plans; $6,125 in insurance premiums; and “perquisites and other personal benefits” totaling $121,231:
- $72,285: Car and driver for commutation and other personal transportation
- $46,976: Incremental cost for the personal use of the corporate aircraft
- $970: Home security monitoring fees
Robert J. Hugin
Celgene, CEO, President, and Chairman of the Board
Total 2013 compensation: $20,995,785
Top three elements: Option awards, $8,729,638; nonequity incentive plan compensation, $7,236,693; stock awards, $3,554,100
All other compensation: $212,854, including $189,375 in employer contributions to the nonqualified plan, “reflecting company matching contributions”; and $19,597 in matching contributions to the 401(k) plan in shared of common stock. In its proxy statement for 2013, Celgene said its Compensation Committee “believes in minimal use of perquisites as they do not reinforce our pay-for-performance philosophy.”3 During 2013, Hugin received:
- $2,232: Excess liability insurance premiums
- $1,650: Contribution to health savings account4
Total 2013 compensation: $14,820,158 (CHF 13,226,287)
Top three elements: Long-term performance plan, $6,864,033 (CHF 6,125,823); equity plan “select” shares,5 $4,161,580 (CHF 3,714,124); base compensation, $2,303,050 (CHF 2,055,417)
Other benefits: $104,939 (CHF 93,652) including unspecified “perquisites and other compensation valued at market price.”
Merck KGaA, Chairman of the Executive Board
Total 2013 compensation: $10,012,362 (€7.311 million)
Top three elements: Variable compensation, $5,935,382 (€4.334 million); Merck long-term incentive plan, $2,532,143 (€1.849 million); fixed compensation, $1,506,407 (€1.100 million)
Additional benefits: $38,344 (€28,000). “The members of the Executive Board also receive certain additional benefits, mainly contributions to insurance policies as well as a company car, which they are entitled to use privately.”6
John C. Lechleiter, Ph.D.
Eli Lilly & Co., Chairman, President, and CEO
Total 2012 Compensation: $11,217,000
Top three elements: Stock awards, $6,750,000; nonequity incentive plan compensation, $2,877,000; salary, $1,500,000
All other compensation: $90,000, consisting solely of company matching contributions for Lechleiter’s 401(k) plan contributions. “There were no perquisites or payments to report in the proxy statement,” Lilly stated in its proxy statement for 2013, adding: “CEO did not use the corporate aircraft for personal use at any time during 2013.” Lilly stated that its executive compensation programs overall included “very limited perquisites.”
Jeremy Levin, D.Phil
Teva Pharmaceutical Industries, President and CEO until October 29, 2013
Total 2013 compensation: $7,167,546
Top three elements: Other compensation, $2,433,349; equity-based compensation, $1,374,934; base salary, $1,242,1397
Benefits and perquisites: $847,681, which according to Teva “may include payments, contributions and/or allocations for savings funds, pension, severance, vacation, car or car allowance, medical insurances and benefits, risk insurances (e.g., life, disability, accident), phone, convalescence pay, relocation, payments for social security, tax gross-up payments and other benefits and perquisites consistent with Teva’s guidelines.” In Dr. Levin’s case, the company said, “Benefits and perquisites” also include payments and benefits associated with his move to Israel. Additional expenses not counted as part of “Benefits and perquisites,” or expenses for which a category of compensation was not specified, include:
- $1,203,125: Cash bonus for 2012, paid to Dr. Levin in 2013 following approval by shareholders at Teva’s 2013 annual shareholders meeting, held August 27, 2013 (counted separately as “Cash bonus”)
- $1,000,000: One-time signing bonus paid on February 1, 2013, which was conditioned upon his continuous employment through such date (counted as “Other compensation”)
- $75,000: Payment usable by Dr. Levin to purchase medical insurance
- $66,318: Payment or reimbursement for rent and the cost of utilities for a family residence, associated with Dr. Levin’s move to Israel. “Associated” payments may include payments such as family visitation travel expenses and medical insurance reimbursement (counted as “Other compensation”)
John C. Martin
Gilead Sciences, Chairman and CEO
Total 2013 compensation: $15,451,862
Top three elements: Option awards, $5,250,046; stock awards, $5,081,801; nonequity incentive plan compensation, $3,543,750
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. We generally do not provide perquisites or other personal benefits to our executive officers,” Gilead stated in its proxy statement for 2013.
Flemming Ornskov, M.D.
Shire, CEO effective May 1, 2013
Total 2013 compensation: $3.402 million
Top three elements: Short-term incentives: Executive Annual Incentive Plan (EAIP), cash element, $1.200 million; base salary, $1.071 million; other payments, $450,000
Other payments: $450,000, which “principally include car allowance, financial and tax advisory support, long term disability and life cover and private medical coverage.” Also included:
- $28,519: Principally in relation to immigration support and temporary living expenses
Robert L. Parkinson, Jr.
Baxter International, Chairman and CEO
Total 2013 compensation: $16,162,128
Top three elements: Stock awards, $6,839,789; option awards, $4,792,568; nonequity incentive plan compensation, $2,695,407
All other compensation: $9,162, reflecting in part $7,650 in 401(k) contributions. Baxter said its “very limited range of perquisites” for named executive officers included “limited personal travel on company aircraft,” and an annual physical exam. “In 2013, the aggregate incremental cost associated with providing these perquisites was less than $10,000,” Baxter stated in its proxy statement for 2013.
Ian C. Read
Pfizer Chairman and CEO
Total 2012 compensation: $18,947,747
Top three elements: Option awards, $6,066,471; stock awards, $6,016,528; nonequity incentive plan compensation, $3,400,000
All other compensation: $476,300, representing both matching contributions made by the company under the Savings Plan and Supplemental Savings Plan, plus the incremental cost to the company of perquisites. Pfizer recorded “Incremental Cost of Perquisites” totaling $243,369 for Read, including:
- $176,714: Company aircraft usage
- $53,071: Car usage with driver
- $10,000: Financial counseling services. Pfizer offers a taxable allowance of up to $10,000 per year, which may include tax preparation and estate planning services.
- $3,013: Home security system available to Read and other executive leadership team (ELT) members. The cost of any such systems is imputed as income to the recipients, as required.
- $571: 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 nonemployee directors for personal use. There is no incremental cost associated with such tickets or other items
Shire, CEO until April 30, 2013
Total 2013 compensation: $5.759 million
Top three elements: Long-term incentives-PSP, $4.928 million; base salary, $422,000; short-term incentives: Executive Annual Incentive Plan (EAIP), $150,000
- $58,550 for advice in relation to U.S. and U.K. tax return preparation and related tax advice, as provided for in his contract
George J. Scangos
Biogen Idec, CEO
Total 2013 compensation: $15,015,147
Top three elements: Stock awards, $9,195,217; nonequity incentive plan compensation, $3,560,480; salary, $1,498,462
All other compensation: $671,511, consisting of $629,041 company contribution to his Supplemental Savings Plan account; $41,516 in reimbursement for legal fees related to the renewal of his employment contract, and $954 for company-paid life insurance premiums. According to Biogen Idec’s proxy statement for 2013, Dr. Scangos is not eligible to participate in the personal financial and tax planning reimbursement program. The proxy statement also cited Biogen Idec’s “company culture to avoid excessive executive benefits and perquisites.”
Leonard S. Schleifer, M.D., Ph.D.
Regeneron Pharmaceuticals, President and CEO
Total 2013 compensation: $36,272,665
Top three elements: Option awards, $33,062,325; bonus, $2,070,000; salary, $1,035,000
All other compensation: $105,340, consisting of:
- $21,460: Long-term disability insurance premiums
- $21,432: Car allowance and related expenses
- $18,500: Dues related to “a club membership”
- $14,382: Medical malpractice insurance premiums
- $10,086: Tax gross-ups related to legal, tax, and financial planning advisory services
- $9,780: Legal, tax, and financial planning advisory services
- $7,650: 401(k) savings plan matching contributions in respect of 2013, paid in February 2014
- $1,655: Life insurance premiums
Total 2013 compensation: $9,836,386 (CHF 8,778,814)
Top three elements: Salary, $4,481,875 (CHF 4,000,000); performance share plan,8 $3,066,578 (CHF 2,736,881); Stock-settled Stock Appreciation Rights (S-SARs),9 $2,913,390 (CHF 2,600,151)
All other compensation: Includes:10
- $33,614 (CHF 30,000): Annual expense allowance
- $6,740 (CHF 6,015): Payments for tax consulting services
Lars Rebien Sørensen
Novo Nordisk, President and CEO
Total 2013 compensation: $3,541,065 (DKK 19.3 million)
Top three elements: Fixed base salary, $1,853,114 (DKK 10.1 million); cash bonus, $935,740 (DKK 5.1 million); pension, $697,218 (DKK 3.8 million)
Benefits: $55,043 (DKK 300,000); Executive management benefits include “Nonmonetary benefits such as company car and phone,” according to Novo Nordisk’s Annual Report for 2013
Total 2013 compensation: $5,623,540 (£3.344 million)
Top three elements: Annual bonus, $3,144,220 (£1.870 million); base salary and fees, $1,849,541 (£1.100 million); pension benefits, $395,134 (£235,000)
Taxable benefits: $184,977 (£110,000), including $171,524 (£102,000) cash, and the remainder consisting of “selected other benefits including healthcare insurance, death-in-service provision and tax preparation advice,” according to AstraZeneca’s Annual Report and Form 20-F Information, 2013
Total 2013 compensation: $11,843,710 (€8,648,326)
Top three elements: Stock options awarded, $3,950,676 (€2,884,800); performance shares awarded, $3,832,467 (€2,798,550); variable compensation, $2,329,419 (€1,701,000)
“Benefits in kind”: $5,445 (€3,976), “relates to a company car with a chauffeur,” Sanofi stated in its Form 20-F for 2013, filed with the U.S. Securities and Exchange Commission.
Sir Andrew Witty
Total 2013 compensation: $12,118,579 (£7.207 million)
Top three elements: Performance Share Plan, $5,464,710 (£3.250 million); annual bonus, $3,152,966 (£1.875 million), salary, $1,780,493 million (£1.059 million)
2013 benefits: Travel expenses, $60,457 (£35,960), which “include car travel, family, spouse and partner costs associated with accompanying the director on GSK business, which are deemed to be taxable benefits on the individual; employee benefits, $29,149 (£17,338), which “include healthcare, car allowance, personal financial advice and life assurance/death in service”; other benefits, $22,668 (£13,483), which comprise “expenses incurred in the ordinary course of business, which are deemed to be taxable benefits on the individual.”
1 Amgen says that because aircraft is used primarily for business travel, its cost figures do not include the fixed costs that do not change based on usage such as pilots’ salaries, aircraft purchase costs, and the cost of maintenance not related to trips.
2 Figure includes $100,886 (€73,667) in remuneration for service on board of directors, but excludes pension contributions and other benefits, according to UCB’s Annual Report for 2013.
3 Hugin and other named executive officers are eligible for reimbursement of “reasonable expenses incurred in obtaining professional tax and financial counseling, up to a maximum of $15,000 annually.” Hugin received no such reimbursement in 2013.
4 The contribution that Hugin received toward his health savings account was made “at the same rate as other employees who enroll in this plan,” Celgene said.
5 Equity Plan “Select” is a global equity incentive plan under which eligible associates may receive an annual award. Novartis defines a target incentive as a percentage of base compensation for each participating associate at the beginning of each performance period, traditionally the start of each calendar year. Target incentive percentages may reach up to 200% of base compensation. Once the award has been granted, it is subject to a three-year vesting period. The long-term value of this award is tied to share price development, “allowing executives to realize the long-term impact of their decisions and actions,” according to Novartis. 2013 was the last year that members of the Executive Committee were eligible to receive an award under the plan, due to a new executive compensation system being approved by shareholders at the 2013 Annual General Meeting.
6 In 2013, Merck KGaA revised its company car policy to require that its company cars be “low-emission, state-of-the-art vehicles that provide good fuel economy.” The change was designed to help fulfill a goal that by 2020, the company will decrease group-wide CO2 emissions of its car fleet by 30% from a 2012 baseline.
7 Base salary was prorated from the $1.5 million annual base salary to which Dr. Levin was entitled.
8 Performance Share Plan (PSP) is a form of variable renumeration open to members of the Corporate Executive Committee and other members of senior management (currently some 140 individuals worldwide). PSP was established in 2002 for periods of three years each and is based on a three-year comparison of the Total Shareholder Return (TSR) with 16 peer companies. In 2013 there were three overlapping performance cycles (PSP 2011–2013, PSP 2012–2014 and PSP 2013–2015), of which PSP 2011–2013 closed on December 31, 2013. The payment of the Performance Share Plan is determined annually by the board of directors, acting upon recommendations from the Remuneration Committee.
9 Stock-settled Stock Appreciation Rights were introduced by Roche on January 1, 2005, in place of stock options. S-SARs entitle holders to benefit financially from any increase in the value of Roche’s nonvoting equity securities (NES) between the grant date and the exercise date.
10 “All other compensation” does not include annual employer contribution to AHV/IV/ALV, the Swiss social security programs providing retirement, disability, and unemployment benefits, which for Schwan totaled $1,438,857 (CHF 1,284,456).