Allergan ($AGN) CEO David Pyott won quite a payday in 2012. In addition to the usual million-dollar-plus salary and bonus, Pyott nabbed a $9.4 million stock award, bringing his total to $21.2 million. When FiercePharma ranks the industry's highest-paid executives in April, Pyott will likely join the club.
That $9.4 million stock award was a big pat on the back in financial form--and a bribe to keep him in his job. The "one-time special recognition and retention" compensation vests in 2017, provided performance goals are met, Allergan's preliminary proxy statement says. If Pyott leaves before then, he forfeits the whole shebang.
Why is Pyott worth it? Well, the board says, Allergan's market value has grown to more than $30 billion from some $2 billion during his time as CEO. Its annual sales have grown to about $5.7 billion from $1.15 billion over the same time frame. Its shares have risen 24% over the past 12 months. The company has won new product approvals and new medical indications for top-performing Botox. And the company met its 2012 targets for earnings per share and R&D reinvestment (if not revenues).
"Mr. Pyott has delivered exceptional value to our stockholders," the board said, adding that the compensation committee "wanted to recognize [his] consistently high performance over his tenure at the company."
As for the rest of Pyott's 2012 compensation package, there was $1.3 million in salary, a $1.65 million cash bonus, and $7.01 million in options. Pension and deferred compensation was $1.8 million, and perks amounted to almost $52,000. In 2011, Pyott's compensation amounted to $13.9 million. So, his $21 million-plus 2012 package represents a 51.4% increase.
Allergan shareholders will have their chance to weigh in on Pyott's compensation, albeit only on an advisory basis. The proxy statement sets out the company's case for its pay plans in preparation for that "say-on-pay" vote. Executive pay leans heavily on pay-for-performance measures and "at-risk" compensation, the company says. Like Pyott's special award and its goal-related vesting provisions, for instance. We'll find out what shareholders think at the company's annual meeting.
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