If there's a pharma company that rewards executives for delivering absolutely nothing, thy name is Medarex. Consider its record in 2008:
- Revenues declined from $56.2 million to $52.3 million.
- Its net loss expanded from $27 million to $38.5 million.
- The company has never made a profit in the last five years. The deficit on its balance sheet accumulated to more than $1 billion.
- Its big melanoma cancer product, ipilimumab, a joint venture with Bristol-Myers Squibb, was nixed by the FDA, which asked the company to come back with more phase 3 data that will only be unblinded in late 2009.
- The stock started the year over $10, it ended at under $6.
- And next year's revenues will be below analysts' estimates.
- Name, 2008 pay, 2007 pay
- CEO Howard Pien, $5.1 million, $2.7 million
- CFO Christian Schade, $2.5 million, $1.9 million
- SVP science Nils Lonberg, $1.8 million, $1.7 million
- SVP prod. dev. Geoffrey Nichol, $1.7 million, $1.6 million
- General counsel Ursula Bartels, $1.1 million, $187,000 Numbers are rounded, includes stock and options whose value changes over time.
The board's compensation committee used this justification for the raises:
... individual performance is assessed on the basis of more subjective, non-formulaic criteria ... [including] ... contribution to the management team and application of managerial leadership skills ...CEO Pien seems to think he's running a tight ship. In Medarex's Q4 call, he told Wall Street:
Our business strategy is driven by our commitment to execution and governed by financial discipline..."Financial discipline"? Twenty-eight percent of his G&A costs are compensation expenses for just five executives.
Here's my promise: If the FDA approves ipilimumab, I'll write a note apologizing to Pien et al for doubting them. In the meantime, Medarex's leadership might want to consider making themselves less expensive for their investors.
* This item and its headline were corrected from the original to account for the part-year pay that Pien and Bartels received in 2007.
- See previous BNET stories on pharma executive compensation:
- Sepracor CEO Got 44% Raise as He Planned 940 Layoffs
- Medicis Doubled Pay of Exec Convicted of Off-Label Sales
- Elan CEO Martin's Pay Cut by Half
- Mylan Execs Get 41% Raise; CEO Takes Company Jet on Vacation for "Security" Reasons
- Valeant Executive Pay Doubles to $19.7 Million Despite Quadrupling of Company's Losses
- Shire CEO Compensation Report Successfully Conceals CEO Compensation
- Wyeth CEO Got 69% Pay Raise; Was "Required" to Use Helicopter; Plus $24 Million Pfizer Sale Bonus
- BMS Execs Get Cash Not to Ride Private Jets; 61% Pay Raise to $59 Million
- Allergan CEO Pyott Received Pay Raise to $11.9 Million
- Abbott CEO White Takes a Pay Cut
- Gilead Executive Pay: Modest Raises for Outstanding Performance
- Gilead Deal Gives CV Therapeutics CEO $8.4 Million Payday Despite Lack of Profits
- Pfizer's Kindler Got $4.2 Million Pay Raise, Despite What Business Press Says
- Pfizer Execs' Golden Parachute Is Actually a Pay Cut
- Genentech's Levinson May Have No Change-of-Control Agreement in Roche Deal
- Amgen CEO Sharer: Options? No Thanks. I'll Just Take the Cash.
- Schering CEO Hassan Has $59 Million Buyout Agreement in Merck Merger
- Merck Executive Pay: $36 million, Use of Private Jet, Cash Bonuses Despite Failures
- Eli Lilly Execs Receive $48 Million in Pay; Plus Chairman Taurel Adds $40 Million Nest Egg
- Novo Nordisk Executive Compensation: A Picture of Modesty (Except for the Car Expenses)
- As Layoffs Begin, Wyeth Execs Get $75 Million Severance Package
- How Pharma's CEO Pay Packages Measure Up