Allergan ended 2017 facing heaps of criticism, with its ill-fated tribal licensing deal at the center. Shares were down. Job cuts were announced. But in spite of all that, its board felt Allergan did well enough to reward CEO Brent Saunders with a $32.8 million pay package—an eightfold increase over 2016.
Saunders pulled in a $1.2 million salary, plus $22.7 million in stock awards and $8.8 million in incentive pay, taking his total for the year to $32.8 million, according to a new proxy filing. His 2016 compensation amounted to just over $4 million. In 2015, the helmsman made $21.6 million.
Saunders' pay hike followed his much-maligned decision to strike a licensing agreement with the Saint Regis Mohawk Tribe in an attempt to sidestep a patent challenge to its blockbuster eye drug Restasis. That drug faced the prospect of early generic competition, and Allergan naturally wanted to avert it. The strategy didn't pan out; a federal judge lambasted it in a separate, related case, and the Patent Trial and Appeal Board rejected the strategy in February. That federal judge invalidated Restasis' patents.
The licensing pact immediately generated pushback from Congress and elsewhere, and many industry watchers thought it would give pharma a black eye during a relatively quiet period for the industry.
In the wake of the patent invalidations, Allergan had to cut costs to prepare for early generic competition. In January, the drugmaker announced it was cutting more than 1,000 staffers and striking 400 open positions to save $300 to $400 million in operating costs.
From the start to end of 2017, Allergan's shares slumped more than 20%, partly on the patent and licensing issues.
But in the meantime, Saunders helped Allergan achieve 9.4% revenue growth, launch 15 products and more, according to the company's proxy. The document noted that he "managed through the challenging period of market reaction to Restasis decision and other upcoming [loss of exclusivities] and created [a] clear cost savings strategy."
Other Allergan executives took home hefty pay increases, too. Former CFO Maria Teresa Hilado—who announced her retirement in September—saw her compensation jump more than eight times over 2016 to $10.7 million. Part of that package was a $2.5 million severance payment. Chief Commercial Officer Bill Meury's compensation jumped six and a half times its 2016 level to $11 million.
How does Saunders' $32.8 million stack up against the rest of pharma? If ranked among 2016's largest pay packages, Saunders' would be in the top five. It's nearly double the 2017 pay package for Eli Lilly CEO David Ricks, who's also had to significantly cut costs. And new GlaxoSmithKline CEO Emma Walmsley took home nearly £5 million in 2017 after nine months on the job.