Among the most highly-paid pharmaceutical CEOs in 2019, Vertex Pharmaceuticals Inc.’s (VRTX) Jeffrey Leiden has given shareholders the biggest bang for the buck. Although he was the only the 9th highest paid (out of 15 ranked), under Leiden’s stewardship the company’s share price rose 53% in the past year.
On the other end of the spectrum was Albert Bourla of Pfizer Inc. (PFE), who raked in a paltry $18 million for shareholders. The company’s share price has plummeted more than 15% during the past 12 months.
The list of the 15 highest-paid CEOs in pharma was published by FierceBiotech, which noted that the industry had a good year in 2019, with plenty of sales increases, new drug launches, M&A activity and solid clinical data.
CEOs of U.S. companies held all but one position on the list. The only head of a company outside the U.S. that was ranked was AstraZeneca’s (AZN) Pascal Soriot, who claimed the 12th spot on earnings of $18.3 million.
The CEOs of some members of Big Pharma didn’t make the cut, including GlaxoSmithKline (GSK), Novartis (NVS) and Roche (RHHBY). They were upstaged by the heads of midsize biotechs such as Alexion Pharmaceuticals Inc. (ALXN) and Vertex.
On method I find helpful to determine who delivered for investors is to look at CEO compensation relative to share growth. To do this, I divided the percentage growth in share price during the last 12 months by the CEO’s pay in millions.
For example, Leiden raked in $18.8 million in 2019 while Vertex shares are 53% higher than a year ago. Dividing his pay by the share gain gives you a ratio of 0.35. That’s how many millions of dollars he earned for each 1% increase in share price. The lower the percentage, the better the CEO is for shareholders.
Following is the complete list of the highest-paid pharmaceutical CEOs:
| CEO | Company | 2019 Compensation ($ millions) | Percentage Increase/Decrease Stock Price- 1 year |
| Martine Rothblatt | United Therapeutics UTHR | 45.6 | 49.0 |
| Daniel O’Day | Gilead Sciences GILD | 29.1 | 19.1 |
| Kenneth Frazier | Merck MRK | 27.6 | 0.7 |
| Alex Gorsky | Johnson & Johnson JNJ | 25.4 | 9.61 |
| Richard Gonzalez | AbbVie ABBV | 21.6 | 21.8 |
| David Ricks | Eli Lilly (LLY) | 21.3 | 27.5 |
| Robert Bradway | Amgen (AMGN) | 19.6 | 29.3 |
| Ludwig Hantson | Alexion Pharmaceuticals ALXN | 18.9 | -3.01 |
| Jeffrey Leiden | Vertex VRTX | 18.8 | 53 |
| Giovanni Caforio | Bristol-Myers Squibb (BMY) | 18.8 | 31.5 |
| Heather Bresch | Mylan | 18.5 | -0.56 |
| Pascal Soriot | AztraZeneca (AZN) | 18.3 | 40.4 |
| Michel Vounatsos | Biogen (BIIB) | 18.2 | 35.7 |
| Albert Bourla | Pfizer PFE | 18.0 | -15.26 |
Source: FierceBiotech
From 2012 to 2020, Leiden led Vertex through significant changes and grew the drug maker into a multi-billion-dollar specialty pharma machine. In April, Leiden became the company’s executive chairman, with Reshma Kewalramani, formerly chief medical officer, assuming the CEO role.
Lieiden’s final year at the top was a sterling one. He led the company in the early stages of an important drug launch and moved R&D candidates along as the company again grew revenues. In the first quarter, Vertex continued its winning ways with an earnings gain of 120% on a sales increase of 77% from the same period a year ago.
Meanwhile, Pfizer shareholders saw sales for 2019 decline 4%, partially driven by patents expiring on several of the company’s key drugs. On the plus side, Pfizer did gain 10 U.S. Food and Drug Administration approvals last year, many of which were for new indications in oncology. To enable the company to focus on the drug side, Pfizer created a joint venture with GlaxoSmithKline that combined the firms’ consumer healthcare businesses. Pfizer also has an agreement to merge its established medicines unit, Upjohn, with generics maker Mylan, to form Viatris.
Disclosure: The author holds positions in Pfizer, Gilead, Johnson & Johnson, Eli Lilly, Bristol-Myers Squibb and Amgen.
Read more here:
- Pliant Therapeutics Share Have Climbed Since IPO
- Teladoc: Leading the Way in Telemedicine
- AstraZeneca Ranked Most Inventive, Roche Most Innovative
Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.
