|Vertex CEO Jeffrey Leiden|
Vertex ($VRTX) CEO Jeff Leiden took home a pretty penny last year, nabbing a $45.8 million pay package and ranking No. 40 among the highest-paid U.S. execs at publicly traded companies. But not everyone is happy with Leiden's hefty paycheck--and shareholders should do something about it, corporate governance adviser Institutional Shareholder Services (ISS) says.
ISS deemed Leiden's pay "excessive" and "not contingent upon rigorous performance conditions," the company said in a note to clients seen by Bloomberg. As ISS figures, Vertex is comparing itself unfairly with its Big Pharma peers, skewing its perspective and basing Leiden's salary on "non-rigorous" methods that shouldn't pass muster. The adviser is urging shareholders to cast a nonbinding vote of disapproval at Vertex' annual meeting on June 4, ISS told the news service.
The Vertex helmsman's 2014 pay package included a $1.1 million base salary, a $3 million cash bonus and $19.9 million in stock awards, plus $14.9 million in a one-time restricted stock grant to stick around during "the critical transition period from 2015 to 2017," according to a filing by the company. Even though Vertex hasn't been profitable since 2012--when Leiden came on board--there are big things in store for the cystic fibrosis drugmaker--and the company wants to keep its CEO around for the ride.
"We're in a constant war for talent," Vertex spokesman Zach Barber told Bloomberg. The company's stock award was meant to keep the company's leaders around over the next few years as it waits for another FDA approval for its cystic fibrosis drug and broadens its portfolio, he added.
Vertex is looking to gain some ground for its cystic fibrosis powerhouse Kalydeco, recently moving one step ahead with an FDA advisory committee nod for a new Kalydeco combo, dubbed Orkambi. U.S. regulators will have until July 5 to decide whether to green-light the therapy in patients 12 and older who have two copies of the F508del mutation in the CFTR gene.
But Vertex could face some hurdles along the way, as payers continue to push back against rising drug prices. The company has already gotten grief for its $311,000 Kalydeco price tag, and payer discontent could reach a head if Orkambi, which could reach 10 times as many patients as orphan med Kalydeco, is priced similarly. But Vertex is working to prep payers for the blow, investing in disease education to help them "estimate the number of eligible patients they may have in their plans," Chief Commercial Officer Stuart Arbuckle told investors earlier this year.
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