This year, the world's best-performing CEO also happens to be a pharma exec. He doesn't hail from Big Pharma, or Big Biotech for that matter. He's far from the industry's highest-paid; in fact, he's never made FiercePharma's CEO pay list.
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| Lars Rebien Sørensen |
Perhaps he should. According to the Harvard Business Review, which ranks CEOs annually, Novo Nordisk ($NVO) chief Lars Rebien Sørensen tops the charts, not just for his company's financial prowess, but also under environmental, social and governance measures.
Since Sørensen took the reins at Novo in 2000, the diabetes-focused company has delivered more than tenfold returns on shareholders' money. Adjusted for the drug industry, that's fifteenfold, the HBR calculates. Its market cap has grown by $169 billion; as of Tuesday, Novo's market cap amounted to more than $356 billion.
All those numbers put Sørensen in 6th place out of the 907 chief executives HBR weighed. And that accounted for four-fifths of his total score. The other one-fifth was a "softer" measure of leadership, based on environmental and social responsibility, plus governance assessments. By those lights, Sørensen and Novo came in 15th.
For several years, the Danish drugmaker has reported its results in light of a "triple bottom line," that attempts to measure Novo's performance as environmental caretakers, as an employer and as a corporate citizen. It takes into account everything from the company's wind power initiatives to its contributions to the World Diabetes Foundation, which it created to build diabetes care infrastructure and capacity in countries where the disease is poorly treated.
That explains why Sørensen climbed up HBR's rankings for 2015. Last year, the review focused only on the financials and he came in 6th; this year, it added the other assessments. In 2013, the Novo chief captured 20th place.
To Sørensen, paying attention to those so-called softer measures delivers hard returns in the long term. "Corporate social responsibility is nothing but maximizing the value of your company over a long period," Sørensen told HBR. "In the long term, social and environmental issues become financial issues." For instance, industrial pollution can trigger stricter regulations that cost money, he said.
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| Biogen CEO George Scangos |
Last year, pharma's highest-ranked CEO on the HBR list was Gilead Sciences' ($GILD) John Martin, in 2nd place behind Amazon's ($AMZN) Jeff Bezos. Martin now sits in 42nd place, putting him in third place in the drug business. Biogen ($BIIB) chief George Scangos was Sørensen's runner-up in 8th place. The only Big Pharma chief to make the top-100 cut was Bristol-Myers Squibb's ($BMY) Lamberto Andreotti, who handed the CEO reins to Giovanni Caforio in May.
Valeant ($VRX) Pharmaceuticals CEO J. Michael Pearson, who ranked among last year's top 10, fell off the list entirely. Allergan ($AGN) chief David Pyott, also among last year's top 10, was replaced by current CEO Brent Saunders when Actavis and Allergan merged last year.
- see the HBR ranking
- check out HBR's Sørensen interview
Specal Report: The top 20 highest-paid biopharma CEOs of 2014