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Shire CEO Compensation Report Successfully Conceals CEO Compensation

By Jim Edwards

Updated on: March 25, 2009 / 11:05 AM EDT / MoneyWatch

Shire, the British company that markets Adderall and Vyvanse, has produced a compensation report for its senior executives that is all but impossible to understand.

The disclosure, starting on page 52 of the annual report, describes the compensation of just three of its top executives -- former CEO Matthew Emmens, current CEO Angus Russell and CFO Graham Hetherington. But nowhere in the report does the company give a summary of total compensation, as U.S. companies are required to do. (A summary gives readers an instant idea of how much money, shares, bonuses and perks were thrown at management, in a single dollar-number.)

Instead, the details of the trio's compensation are spread across 13 pages of charts, graphs and small-print, all seemingly written by lawyers.

It's a perfect example of the non-transparency favored by British regulators, as compared to the U.S. system. While U.S. compensation reports are no less lengthy, they at least require companies to list the haul of the five top execs, and to do so in a way -- the summary -- that a layperson can understand. It also forces companies to put a plain dollar value on non-cash compensation such as non-vested shares and options. (Shire, of course, doesn't just trade in Britain, it is also listed on NASDAQ.)

The Shire report does none of that. It is impossible for any reasonable person to read the Shire report and come away with a functioning knowledge of what its execs were paid, in total, in 2008. (BNET noted in February that Shire has a habit of dumping information on the market in a form that is difficult to digest.)

Here are some highlights:

Page 61: executive "emoluments":
Name, 2008 pay, 2007 pay
ex-CEO Matthew Emmens, $1.6 million, $3.6 million
CEO Angus Russell, $2.7 million, $1.8 million
CFO Graham Hetherington, $784,000

These salaries seem on the low side for drug CEOs, but they don't count stock and options (although, confusingly, it does count deferred share incentives).

Later we find that Emmens' salary as board chairman is $546,989. He received $292,000 in directors' fees, the report notes, presumably because he was only chairman for half the year.

Page 62 notes that Emmens held nearly 40,000 ordinary shares at the end of the year, Russell held 17,000 and Hetherington held 4000. The same page notes that Emmens gained $171,000, $73,000 and $60,000 on the exercize of share options.

But then, on page 63, we find a table indicating that Emmens owns 1.5 million ordinary shares, Russell has 554,760 and Hetherington has 1240. Various exericize dates and prices are listed, but no total value from their realization or present value is given. Values are given in dollars even though Shire's stock also trades in UK sterling.

And I'm giving you the simplified version. Don't get me started on the section titled "Details of the SARs granted under Part A and PSAs granted under Part B of the Portfolio Share Plan."

So, congratulations Shire, you have successfully "disclosed" your top executives' compensation in such a way as to make it all but impossible to calculate how much they were given.