After seeing its business take a beating over the last year, Teva Pharmaceutical’s board knew the drugmaker badly needed a permanent CEO. The search team was well aware of that fact and lured Lundbeck chief Kåre Schultz with a handsome offer that makes him one of the top paid pharma chiefs.
All told, Teva enticed Schultz with a pay and welcome package worth up to $52 million, including $20 million in cash upfront, according to an SEC filing on the Monday hire. The new helmsman will also receive a restricted stock award of $5 million and two performance unit stock awards each worth $7.5 million.
Schultz’s base salary is $2 million, with an annual bonus opportunity worth 140% to 200% of his salary. Under the agreement, he’ll also receive $6 million in annual equity incentives.
For Teva, the pay will be well worth it if Schultz is able to engineer a turnaround. The Israeli drugmaker has had its stock price and business prospects battered over the last year as the generic pricing environment worsens and other threats continue to unfold. Knowing the challenges the company faced, Teva’s board said during the search that it was looking for a world-class pharma vet.
And Schultz has fixed things at an ailing drugmaker before. After Lundbeck's former CEO stepped down and as it was laboring to launch new meds, it hired Schultz in 2015. He had already made a name for himself during a long tenure at Novo Nordisk and during his two years at Lundbeck, he won praise for improving revenue and profits.
If ranked among last year’s top-paid pharma executives, Schultz package would place him at No. 3, behind Mylan chairman Robert Coury’s $97 million and Valeant CEO Joseph Papa’s $62.7 million. Like Schultz, Papa also joined a drugmaker suffering from a barrage of negative developments in recent years.
Aside from tough pricing on generics, Teva is also dealing with a price fixing investigation and a generic threat to key multiple sclerosis drug Copaxone. The company recently kicked off a restructuring set to affect 7,000 employees around the world after its $40.5 billion buyout of Allergan's generic business became more of a drag than a boost for the company.