Gilead's huge Sovaldi payoff yields a nice 23% pay hike for CEO

Gilead CEO John Martin

No one would say Gilead Sciences CEO John Martin is hurting financially. For several years, he has collected annual compensation worth about $15 million. Not too shabby. And his stock gains since 2009 run into the hundreds of millions--yes, hundreds.

But for a record-smashing year that vaulted his company into the ranks of the global top 10, Martin snared a comparatively small payoff.

True, Martin's 2014 compensation grew by $3.5 million, to almost $19 million. That's a 23% increase. His base salary amounted to $1.6 million, his options were worth $5.2 million, and his stock awards hit $8.4 million. Cash incentive pay was an impressive $3.72 million.

Plus, according to Gilead's ($GILD) proxy statement, the payoff from stock options he exercised last year was more than $158 million. Again, who'd feel sorry for a guy with that kind of compensation package? Certainly not the patient advocates who protest Gilead's aggressively high prices.

But for a biotech CEO with a record-smashing year, that $18.5 million is, well, conservative. For the most obvious example, look at Regeneron ($REGN). When the company's blockbuster eye drug Eylea hit the market by storm in 2012, CEO Len Schliefer collected $26.6 million worth of options and $30 million in total pay. R&D chief George Yancopoulos scored an even bigger sum; his 2012 compensation amounted to $81.5 million. That's including $21 million in options, plus a $57 million retention grant aimed at keeping him in place through 2017.

Or United Therapeutics ($UTHR), which gave CEO Martine Rothblatt a $36 million equity award in 2013, ostensibly to bring her compensation up to par with that of her peers. No big-time launch that year, no major payoff for shareholders--but the board decided the company's ongoing performance, compared with that of its rivals, was strong enough to put Rothblatt in the 75th percentile, compensation-wise.

Or Valeant Pharmaceuticals ($VRX), which handed CEO J. Michael Pearson $12.2 million in stock awards for his M&A-fueled growth record--and that was for 2011, before Valeant bought Medicis, Bausch & Lomb, or Obagi. That year, he also got a $13.9 million dividend agreed on in 2008, back when Valeant and Biovail merged. His total for 2011? More than $36 million.

Or Allergan ($AGN), the company Valeant tried to buy until Actavis ($ACT) swooped in with a higher offer. CEO David Pyott got a "one-time special" share award in 2012, worth $9.4 million at the time. The extra boost recognized Pyott for boosting the company's market value by $30 billion since taking over the CEO chair--and because it wouldn't vest till 2017, was a retention bonus, too. Under the terms of its merger with Actavis, Allergan will accelerate vesting of its share awards--including Pyott's.

We are not arguing for Gilead to give Martin and his execs a major windfall. His $3.5 million raise for 2015 simply illustrates how one company's compensation committee can make wildly different decisions from another's, and both say they emphasize compensation that rewards CEOs and their colleagues for performance. Some are mavericks. Others, not so much. To be fair, most pharma companies don't hand out big, one-time share awards.

So, executive pay may purportedly follow some rhyme and reason, but that all depends on who's dictating the rhyme scheme. And frankly, put all these top-earning CEOs in the EU, and shareholders would be marching in the streets.

- read the Gilead proxy

Special Reports: Top 15 pharma companies by 2014 revenue - Gilead | Top 15 highest-paid biopharma CEOs of 2013 - John Martin, Gilead