For the first time in a decade, compensation for chief executive officers at S&P 500 companies declined in 2022, dipping down from an all-time high median of $14.7 million in 2021 to $14.5 million last year.
But you won’t find any evidence of the slide in biopharma. In an industry often said to be immune to economic headwinds, its top execs were again well compensated, with most getting significant bumps in pay.
“Pharma has been the highest growing sector for compensation in the S&P 500 for the last five, six, seven, eight years,” said James Reda, the national managing director and practice leader, executive compensation, at Illinois consulting firm Gallagher.
Reda estimated that year-over-year growth for biopharma CEOs has hovered around 25%, “which is huge when it’s come for (several) years,” he said.
Going back to 2012, when Fierce Pharma tracked the industry’s highest-paid chief executives, only five were paid more than $18 million. Ten years later, our list of the top 15 highest-paid CEOs—which includes those at companies with a market cap of at least $20 billion—bottoms out at $19 million.
Seagen CEOs top the list
Who were the highest paid CEOs in 2022? Oddly enough, they were the ones came and went, with three of the top four from the same company—Seattle biotech Seagen. Additionally, two of the top eight were from Biogen.
Topping the list is Seagen’s David Epstein, who earned $57.5 million. Making the figure more staggering was that Epstein was hired by Seagen on Nov. 9, meaning he made more than a $1 million per day in 2022.
His compensation was made up almost entirely ($57.2 million) of sign-on equity awards, which included $6 million in relocation expenses, the company said (PDF) in a securities filing.
In March, when Pfizer announced that it had agreed to buy out Seagen, one of the questions surrounding the deal was just what role Epstein played in executing it. In an interview with Fierce Pharma earlier this month, Epstein said when he was hired, he believed it was for the “long haul.”
But if he helped pull off the $43 billion deal with Pfizer, the compensation can be justified, explained Reda.
“There’s nothing really tethering these packages besides what’s the potential for these companies and what’s the CEO asking for,” Reda said. “The numbers are so warped because the values are so high.”
Seagen also paid $32.8 million to former chairman and co-founder Clay Siegall, who departed in May following a domestic violence arrest (though will now not face charges). Of his compensation, $28.1 million came in equity awards, which were extended for 18 months beyond his separation as part of his severance.
Also scoring big for Seagen was interim CEO Roger Dansey—who filled the position for six months between the departure of Siegall and the hire of Epstein. Dansey collected $36.4 million as he was handed a $18.7 million “special performance-based option grant,” his reward for delivering “key commercial and R&D milestones,” according to the company’s proxy. It was a huge bump for Dansey, who made $8.9 billion in 2021 as the company’s chief medical officer.
Big pay for Biogen duo
Just as Epstein and Siegall made out big by coming and going, the same held true for Biogen’s incoming chief Chris Viehbacher, who collected $30.5 million, and departing Michel Vounatsos, who made $26.6 million, including $8.8 million in severance pay.
Reda said that several of the largest severance packages with which he is familiar are for pharma CEOs.
“A lot of the terms of these agreements are for more than three years,” Reda said. “When it comes time for the renewal of their agreement, depending on what situation they’re in, an extra $10 million a year is not a big deal when you consider (the value) of these companies.”
Large bumps for Pfizer, Thermo Fisher CEOs
Several CEOs received large increases in pay in 2022, led unsurprisingly by Pfizer helmsman Albert Bourla, Ph.D. In a year in which Pfizer became the first pharma company to ever reach $100 billion in revenue, Bourla saw his compensation jump 36%, from $24.3 million to $33.0 million.
Thermo Fisher’s Marc Casper received $28.2 million in 2022, a 33% jump in his pay, thanks largely to a boom in his stock and option awards “to align the retirement vesting provisions in his equity award agreements with those granted to all other executives,” the company said (PDF) in its SEC filing.
Other big gainers in 2022 were Daniel O’Day (Gilead), whose pay increased 12% to $21.6 million, and Richard Gonzalez (AbbVie), who was up 10% to $26.3 million.
U.S. CEOs dominate rankings
As is usually the case, the 14 highest paid CEOs in biopharma were from U.S. companies. The lone exception on the top 15 list is No. 15 Pascal Soriot of U.K.-based AstraZeneca.
The difference in compensation between European and U.S. companies is evident when comparing firms of similar value. For example, while Sanofi, which has a market cap of $134 billion, paid its CEO Paul Hudson $10.7 million last year, Bristol Myers Squibb, with a market cap of $136 billion, paid Giovanni Caforio $20.1 million.
The disparity is evident in the 2022 pay of CEOs of several other major British and European companies including GSK’s Emma Walmsley ($10.3 million) and Novartis’ Vas Narasimhan ($9 million).
“It’s part of their culture. Someone who’s an engineer or scientist is (seen) as worthy as someone running the company,” Reda said. “It’s been that way for 30 years in Europe. I don’t think it’s gonna to change.”
Familiar names and one surprise
Most of the names on the 2022 list are familiar from previous years, including Amgen’s Robert Bradway, who has remained in the top 15 since his promotion to CEO in 2012, when he made $13.6 million. A decade later, Bradway compensation has climbed to $21.4 million.
One surprise name on the list was Francis deSouza, CEO of DNA sequencing firm Illumina, who saw an 87% increase in his pay to $26.8 million in 2022.
The boost was a surprise as well to investors who have seen the company’s market cap shrink from $75 billion to $35 billion after its controversial $8 billion acquisition of Grail in August of 2021. Early this month, after a challenging proxy battle, deSouza resigned.
While pharma CEOs are compensated well, their tenures can be more volatile, Reda said, because of investor and board dynamics.
“You have to take advice well. Things change more quickly in pharma than say in an industrial company,” Reda added. “You really need to keep your eyes and ears open.”
The Top 15
Check out the list below, which includes executives of companies that closed 2022 with a market cap of at least $20 billion.
1-David Epstein (Seagen) $57.5 million
2-Roger Dansey (Seagen) $36.4 million
3-Albert Bourla (Pfizer) $33 million
4-Clay Siegall (Seagen) $32.8 million
5-Chris Viehbacher (Biogen) $30.5 million
6-Marc Casper (Thermo Fisher) $28.2 million
7-Francis deSouza (Illumina) $26.8 million
8-Michel Vounatsos (Biogen) $26.6 million
9-Richard Gonzalez (AbbVie) $26.3 million
10-Daniel O'Day (Gilead) $21.6 million
11-Robert Bradway (Amgen) $21.4 million
12-David Ricks (Eli Lilly) $21.4 million
13-Giovanni Caforio (Bristol Myers) $20.1 million
14-Stephane Bancel (Moderna) $19.4 million
15-Pascal Soriot (AstraZeneca) $19 million