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Illustration by Brian Tucker, BioPharma Dive

BioPharma Dive CEO Compensation Report Follow the money: How biopharma CEOs and workers got paid in 2018

Most drugmaker CEOs received hefty pay raises in 2018, despite a year in which the share prices of many companies declined, according to a BioPharma Dive analysis of financial filings.

BioPharma Dive looked at nearly 200 life sciences companies, ranging from pharmaceutical giants to small biotechs with market values of at least $500 million. The review compiled data on CEO and median employee compensation, stock performance and gender representation.

The typical CEO in the drug industry earned $5.7 million in total compensation last year, up 39% from the median figure for 2017. Averaged, however, CEO pay across the group came in at $7.2 million, pulled higher by lofty pay packages for heads of the leading pharma and biotech companies.

Employees tended to also receive more in 2018, but not nearly as much as the gains recorded by those at the top. Median compensation for workers, which includes benefits like healthcare as well as salary, increased about 6% last year, to $177,560.

Last year, less than 10% of pharma and biotech CEOs were women, or 16 of the 194 executives included in this analysis. Only one, GlaxoSmithKline's Emma Walmsley, headed up a global pharmaceutical company. Female CEOs earned slightly less, by about 9% on a median basis, although the small number of data points makes drawing conclusions difficult.

Below, we lay out some of the top findings from our analysis. Our methodology is detailed in full at the bottom of this report.

Q1. Which CEOs were paid the most last year?

Rankings are listed first for the overall group of 194 companies, and then are segmented by company size: large pharma, biotechs worth more than $10 billion, between $2 billion and $10 billion, and between $500 million and $2 billion.

Compensation includes base salary, cash bonuses and long-term stock and option awards, as described in annual proxy filings.

2018 CEO pay: Entire group
Company CEO Compensation, in $USD millions
Moderna Stephane Bancel
 $58.6
Beigene John Oyler
 $27.9
Rubius Therapeutics Pablo Cagnoni
 $27.1
Regeneron Leonard Schleifer
 $26.5
Gilead John Milligan
 $26.0
Graph by BioPharma Dive
2018 CEO pay: Large pharma
Company CEO Compensation, in $USD millions
Merck & Co. Ken Frazier
 $20.9
Johnson & Johnson Alex Gorsky
 $20.1
Pfizer Ian Read
 $19.5
Bristol-Myers Squibb Giovanni Caforio
 $19.4
Eli Lilly David Ricks
 $17.2
Graph by BioPharma Dive
2018 CEO pay: Large biotech
Company CEO Compensation, in $USD millions
Regeneron Leonard Schleifer
 $26.5
Gilead John Milligan
 $26.0
AbbVie Rick Gonzalez
 $21.3
Vertex Jeffrey Leiden
 $18.8
Amgen Robert Bradway
 $18.6
Graph by BioPharma Dive
2018 CEO pay: Mid-sized biotech
Company CEO Compensation, in $USD millions
Moderna Stephane Bancel
 $58.6
Beigene John Oyler
 $27.9
Bluebird bio Nick Leschly
 $24.0
Alkermes Richard Pops
 $17.1
Horizon Pharma Timothy Walbert
 $16.8
Graph by BioPharma Dive
2018 CEO pay: Small biotech
Company CEO Compensation, in $USD millions
Rubius Therapeutics Pablo Cagnoni
 $27.1
MeiraGTx Alexandria Forbes
 $23.0
Endo Paul Campanelli
 $20.0
TG Therapeutics Michael Weiss
 $14.3
Eagle Pharma Scott Tarriff
 $11.3
Graph by BioPharma Dive

Q2. Which CEOs made the least last year?

2018 CEO pay: Entire group
Company CEO Compensation
Eidos Neil Kumar
 $411,574
Innoviva Geoffrey Hulme
 $500,333
Twist Bioscience Emily Leproust
 $524,674
Medpace August Troendle
 $528,290
Audentes Therapeutics Matthew Patterson
 $780,480
Graph by BioPharma Dive
2018 CEO pay: Large pharma
Company CEO Compensation, in $USD millions
Bayer Werner Baumann
 $6.3
Novo Nordisk Lars Fruergaard Jorgensen
 $6.6
Allergan Brent Saunders
 $6.6
Novartis Vas Narasimhan
 $6.8
GlaxoSmithKline Emma Walmsley
 $7.8
Graph by BioPharma Dive
2018 CEO pay: Large biotech
Company CEO Compensation, in $USD millions
Exact Sciences Kevin Conroy
 $7.0
Incyte Herve Hoppenot
 $9.3
Illumina Francis deSouza
 $11.1
BioMarin Jean-Jacques Bienaime
 $15.6
Biogen Michel Vounatsos
 $16.2
Graph by BioPharma Dive
2018 CEO pay: Mid-sized biotech
Company CEO Compensation
Guardant Health Helmy Eltoukhy
 $818,405
Reata Pharmaceuticals J. Warren Huff
 $934,500
Immunomedics Michael Pehl
 $1,371,964
Sarepta Therapeutics Douglas Ingram
 $1,433,872
MorphoSys Simon Moroney
 $1,936,669
Graph by BioPharma Dive
2018 CEO pay: Small biotech
Company CEO Compensation
Eidos Therapeutics Neil Kumar
 $411,574
Innoviva Geoffrey Hulme
 $500,333
Twist Biosciences Emily Leproust
 $524,674
Medpace August Troendle
 $528,290
Audentes Therapeutics Matthew Patterson
 $780,480
Graph by BioPharma Dive

Q3. What goes into a CEO's compensation?

CEOs in biotech and pharma earn sizable annual salaries, but it's stock and option grants that compose the bulk of total compensation. Like many corporations around the world, biotech and pharma chiefs typically also receive cash bonuses linked to their yearly performance — as defined by the company.

CEO pay breakdown, a sample
  • Base salary
  • Annual cash bonus
  • Stock and option awards
  • Other
Company CEO Total compensation
Pfizer Ian Read $19,549,213
$2.0 million
$3 million
$13.9 million
$0.7 million
Regeneron Len Schleifer $26,520,555
$1.3 million
$2.9 million
$21.3 million
$0.9 million
Moderna Stephane Bancel $58,608,484
$0.9 million
$1.8 million
$56 million
Negligible
Graph by BioPharma Dive

Paying CEOs mostly via equity awards, the thinking goes, keeps the incentives of company executives in line with those of shareholders. Critics, though, argue the practice can spur short-term thinking, leading company chiefs to chase quarterly earnings numbers rather than long-term growth.

Equity awards can vary greatly year to year. Sarepta Therapeutics' Douglas Ingram, for example, earned roughly $55 million more in 2017 than in 2018, thanks to $44 million in option grants that year. Compensation for MeiraGTx's Alexandria Forbes, meanwhile, swung from just over $1 million in 2017 to nearly $23 million last year.

Valuing equity-based compensation is another question. For the purposes of regulatory reporting, companies determine an effective fair value for stock and option grants given to CEOs. That can differ — quite significantly — from what executives actually earn when they go to sell shares or exercise options, a sum generally referred to as annual realized gains.

Regeneron's Leonard Schliefer, for example, was paid $26.5 million last year. But he also exercised options worth nearly $113 million. (Not all of those options were granted in 2018.)

Q4. Are female CEOs well represented? Are they paid similarly to men?

Like most other industries, biotech and pharma leadership skews heavily male. In 2018, more than 90% of CEOs were men. Just 16 of the 194 executives included in this analysis were female.

Gender representation is even more lopsided among the largest companies. Across the 25 biggest pharma and biotech companies by value, GlaxoSmithKline's Emma Walmsley was the only woman.

2018 CEO gender representation: Entire group Ranked largest to smallest by market value
  • Male CEO
  • Female CEO
Data visualization by BioPharma Dive

Compensation appeared broadly similar by median pay, although such comparison is hindered by a fewer number of data points for female CEO pay. Among the 15 female CEOs for whom numbers were available, the median woman made $5.2 million versus the $5.7 million earned by the median male, a difference of about 9%.

It's worth noting, though, that Walmsley's pay of $7.8 million last year ranked 9th among the 14 pharma executives included in BioPharma Dive's analysis, and below the median sum for both the U.K. cross-industry and global pharmaceutical groups used by GSK as comparators.

Q5. What did the typical CEO earn? How about the typical employee?

Most drugmakers reported CEO pay. Compensation for a handful of executives whose companies are listed abroad was not readily available. Among the 182 companies that did report, the median compensation was about $5.7 million. Averaged, that figure rose to just over $7.6 million.

Fewer companies, 112, reported median employee pay. Using that dataset, the median figure for the group was $177,560, a rough estimate of what a typical worker in the biotech and pharma industry might make. Median pay numbers ranged from $38,661 to $804,000.

Using those median figures for the group yields a CEO-to-employee pay ratio of roughly 32:1.

Q6. Which companies paid their median employee the most? The least?

2018 median employee pay: Highest
Company Compensation
Madrigal Pharma (17 employees)
 $804,000
The Medicines Company (62 employees)
 $659,048
Esperion Therapeutics (76 employees
 $601,814
Sage Therapeutics (637 employees)
 $589,166
Heron Therapeutics (68 employees)
 $418,130
Graph by BioPharma Dive
2018 median employee pay: Lowest
Company Compensation
Opko Health (5,690 employees)
 $38,661
Mylan (35,000 employees)
 $42,407
Immunomedics (346 employees)
 $43,427
ANI Pharmaceuticals (299 employees)
 $52,389
Akorn (2,220 employees)
 $52,434
Graph by BioPharma Dive
2018 median employee pay: Large pharma Best, worst and median
Company Compensation
Bristol-Myers Squibb
 $112,174
AstraZeneca
 $71,000
Median for group
 $88,312
Graph by BioPharma Dive
2018 median employee pay: Large biotech Best, worst and median
Company Compensation
Celgene
 $263,237
Mylan
 $42,407
Median for group
 $162,331
Graph by BioPharma Dive
2018 median employee pay: Mid-sized biotech Best, worst and median
Company Compensation
The Medicines Company
 $659,048
Immunomedics
 $43,427
Median for group
 $207,731
Graph by BioPharma Dive
2018 median employee pay: Small biotech Best, worst and median
Company Compensation
Madrigal
 $804,000
Opko Health
 $38,661
Median for group
 $177,153
Graph by BioPharma Dive

Q7. Where was the CEO-employee pay gap the widest? The smallest?

2018 CEO-employee pay gap: Widest
Company Pay gap
Mylan 315 : 1
Beigene 293 : 1
J&J 268 : 1
Pfizer 244 : 1
Endo International 243 : 1
Graph by BioPharma Dive
2018 CEO-employee pay gap: Smallest
Company Pay gap
Innoviva 2 : 1
Sarepta 4 : 1
Madrigal 7 : 1
ArQule 10 : 1
Pacific Biosciences 10 : 1
Graph by BioPharma Dive

Q8. Did CEO compensation grow faster than employee compensation?

The provision under the Dodd-Frank Act compelling companies to disclose median employee compensation and CEO pay ratios took effect for fiscal years beginning on or after Jan. 1, 2017, making 2018 the second year for which this data is available.

While that doesn't provide much context, two data points allow for some comparison of change over time.

BioPharma Dive found median CEO compensation — including equity awards — grew significantly faster than that of a median employee at small and medium-sized biotech companies. At large biotechs, median CEO and employee pay grew at roughly similar rates. In absolute terms, however, the typical executive earned more than $800,000 more in 2018 than in 2017, versus a boost of about $9,000 for the typical worker.

Growth in compensation, 2017 to 2018
Large Biotech Mid Biotech Small Biotech
CEO pay ↑ 5% ↑ 29% ↑ 65%
Median Employee Pay ↑ 6% ↑ 8% ↑ 1%
Note: As most large pharma in BioPharma Dive's group of 14 are foreign, there are too few data to make a good comparison. Graph by BioPharma Dive

Q9. Did CEO pay and company share prices move in the same direction?

The typical biopharma company saw its stock fall about 8% last year, but faltering market performance did not appear associated with lower executive compensation. Median pay for CEOs of companies which ended 2018 in the red, in fact, grew slightly more than for those who led drugmakers with positive stock returns last year.

Among the 69 drugmaker stocks which grew in value year over year, the median executive compensation increased by 23%, versus the 27% bump to median pay among the 105 companies which posted declining share values.

For what it's worth, employee pay moved in similar directions to stock performance: median compensation among companies in the green increased 6.1% while declining 4.6% for those in the red.

Q10. Do drug prices play a role in CEO compensation?

Scrutiny of executive pay is commonplace regardless of sector, but in the drug industry it comes amid criticism over pharmaceutical pricing.

Do pharma and biotech CEOs make more if they hike prices? It was a question asked by Sen. Ron Wyden, D-Ore., at a hearing held by the powerful Senate Finance Committee in February, when top executives from seven drugmakers were called to testify on drug costs.

Wyden's question was directed at Richard Gonzalez, the CEO of AbbVie, which makes the world's top-selling drug, Humira. AbbVie uses Humira sales as one factor in deciding the annual cash bonus for its top executives, which for Gonzalez totaled nearly $4 billion last year.

AbbVie's bonus framework is notable. Among the top 25 companies by value in BioPharma Dive's analysis with marketed products in the U.S., only six included sales of an individual product in their annual bonus calculations.

Wyden's question also raises a wider one for the industry. Revenue targets are typically used in calculating executive compensation like cash bonuses. For many biotechs, though, revenue can be roughly that of one product's sales. AbbVie, for instance, derives three-fifths of its revenue from Humira, while the five others that included individual product sales targets in bonus calculations depended greatly on their respective top-sellers.

Raising prices is a potent lever for boosting sales, so tying bonuses to revenue targets could in theory link compensation to prices for those companies with only one or few marketed products.

In the case of Humira, AbbVie raised the drug’s list price by 9.7% in 2018 and by 6.2% in 2019 — increases that, while diminished by rebates and discounts, helped sales. In a written response to Wyden's question, AbbVie said no one factor determined more than 3% of Gonzalez's total compensation, of which his annual bonus made up 18%.

Others are more explicit. Vertex earns much of its revenue from its three marketed cystic fibrosis drugs and includes a target for combined revenues in its annual bonus calculation. According to the company, though, such goals "were not set, achieved through or dependent upon, price increases."

Methodology

BioPharma Dive merged and de-duplicated lists of holdings included in two biotech stock indices, the SPDR S&P Biotech ETF and iShares NASDAQ Biotechnology Index, to create a group of 238 biotech companies.

We then added in biotech companies which had IPO'd in 2018 and are not yet included in either index (e.g. Moderna) to get a list of 265.

Pharmaceutical companies, including those headquartered abroad, were included in a separate list of 14.

Biotech companies with market capitalizations below $500 million as of May 20 were excluded from this analysis, reducing the biotech group to 180 companies. We did so to ensure we had a data set with companies in which median employee compensation would be based on a sufficient number of employees, and to create a more manageable data set. Smaller companies are also more likely to claim an exemption from reporting median employee compensation and CEO pay ratios.

Market capitalizations were calculated using the Google Finance function or, when necessary, by multiplying the last disclosed number of outstanding common shares by closing prices on May 20.

Employee compensation numbers and CEO pay ratios were not reported by all companies. Many that did not claimed "Emerging Growth Company" status, a reporting exemption under the Dodd-Frank Act.

Employee numbers were tabulated from the latest relevant regulatory disclosure available, usually a Form 10-K. In some cases, reported CEO pay ratios were rounded to the nearest whole number.

For growth in median compensation, BioPharma Dive segmented companies into large, mid-sized and small biotechs, excluding those lacking matched data (e.g. no 2017 numbers reported). We then calculated the median figures of each matched group for CEO and employee compensation, measuring percent and absolute change from 2017 to 2018.

A public version of the database BioPharma Dive created can be found at this link.

Definitions

Large cap biotech: Market capitalization greater than $10 billion

Mid-sized biotech: Market capitalization between $2 billion and $10 billion

Small biotech: Market capitalization between $500 million and $2 billion

CEO total compensation: The total figure reported on Summary Compensation Table in proxy or other filings. Inclusive of base salary, annual cash bonus, equity and option grants as well as miscellaneous payments within the 2018 calendar year.

Median employee compensation: Employee compensation reported in the Dodd Frank Act-mandated CEO pay ratio section of company proxy filings. Inclusive of salary, 401(k) contributions and healthcare benefits.

CEO pay ratio: A ratio of CEO total compensation to median employee compensation. Companies are permitted under the Dodd-Frank Act to calculate their own median employee compensation, and can exclude up to 5% of their workforce from such calculations.