A big question hanging over AbbVie CEO Richard Gonzalez is whether he can lead the Illinois pharma safely through the patent cliff of its revenue cornerstone Humira. By the look of 2020’s results, he’s on the right track—and his compensation shows it.
For 2020, AbbVie’s handing its longtime CEO $24 million in total pay, up from 2019’s $21.6 million, the company disclosed in a proxy filing.
The 11% jump stems mainly from a $3.3 million increase in its long-term equity awards, and some COVID-19 maneuvering played a role as well. His equity pay topped $14 million, and he collected a cash incentive payout of almost $5 million.
AbbVie officially completed its $63 billion Allergan acquisition in May. As a result, its 2020 revenue rose 37.7% to $45.8 billion. On a currency-adjusted basis, the company’s revenue met the target the board had set.
AbbVie managed to hit that goal despite COVID-19 headwinds because of two newly launched immunology drugs: Skyrizi and Rinvoq. Both drugs continuously wowed industry watchers with Street-beating sales quarter after quarter last year. Their 2020 haul came in at $2.3 billion, and the company expects that number to double this year.
AbbVie has bet its long-term growth on the two meds, especially as Humira biosimilars are expected in the U.S. in 2023. The drugs have a long list of potential market expansions down the road, including Rinvoq's plays this year in psoriatic arthritis, ankylosing spondylitis and atopic dermatitis. The oral JAK inhibitor also recently slayed two phase 3 studies in moderate-to-severe ulcerative colitis.
Based on some of the latest clinical trial wins, AbbVie has significantly dialed up its sales estimates for the two drugs to a combined $15 billion in 2025 from the previous $10 billion.
Investors have been glad about what they’ve seen lately, as AbbVie topped the ranking of largest market cap growth in the biopharma industry with a whopping 44.4% increase in a year-end comparison between 2020 and 2019, including a 22.4% jump in the final quarter that was buoyed by positive news from the two meds.
They helped Gonzalez collect $4.9 million in cash incentive pay at 175% payout of target, which is itself 165% of his base salary.
Still, Gonzalez’s major pay boost came from his long-term equity awards, which totaled $14.4 million at grant value. In 2020, AbbVie did so well on such measures as earning per share and return on invested capital, leading to the handsome award.
The board also highlighted some achievements AbbVie chalked up in response to COVID-19. For example, the company had no workforce reductions or salary cuts associated with COVID, according to the filing.
It also made two senior exec appointments. Gonzalez lifted U.S. commercial head Jeffrey Stewart to replace retiring Carlos Alban as AbbVie’s new chief commercial officer. He also appointed a new chief equity officer in Rae Livingston as part of the company’s broader drive to nurturing an inclusive working environment.