Amgen CEO nabs pay raise thanks to Horizon deal. Does that incentivize aggressive M&A?

Amgen CEO Robert Bradway scored a 5.8% increase in overall compensation last year mostly thanks to the company’s acquisition of Horizon Therapeutics.

For 2023, Amgen granted Bradway $22.6 million in total pay, compared with $21.4 million for 2022, a securities filing shows.

While the CEO’s equity awards were almost identical between the two years, the main change in his 2023 pay came from a $1.1 million uptick in cash incentive pay.

When evaluating Bradway’s performance for the year, Amgen’s board highlighted the company’s revenue outperformance, which came courtesy of the Horizon merger. Conversely, key clinical and regulatory advancements turned out to be a drag during the review.

After resistance from the U.S. Federal Trade Commission, Amgen successfully closed the Horizon deal in October 2023. Afterward, the Horizon rare disease portfolio brought Amgen nearly $1 billion in revenues for the rest of the year, taking the company’s full-year total to $28.2 billion.

Based on the Amgen board’s target of $26.5 billion, which was set in March 2023 without any contribution from Horizon, Bradway easily beat the revenue goal. Given the company’s revenue success, the board granted Bradway more than double the payout target—and nearly the maximum amount allowed—for this metric. 

This compensation policy raises a question: Wouldn’t executives just be incentivized to make aggressive M&A plays to beat targets wherever possible?

In response to a Fierce Pharma request for comment, an Amgen spokesperson pointed back to the proxy statement, including the company’s target-beating performance against a three-year period starting from 2021 as part of its long-term incentive payout to executives.

“As a result of the focus of and execution by our executive leaders and the efforts of our entire company, including the contributions from our new rare disease therapeutic area, our financial performance exceeded targets,” the company said in the securities filing.

Not all companies follow the same rules as Amgen. For example, Biogen excluded revenues from newly acquired Reata Pharmaceuticals in assessing its CEO Chris Viehbacher’s 2023 pay. Amgen lists Biogen as a peer company in its compensation overview.

Another field in which Bradway scored an outsized incentive reward was the environmental, social and governance category. Amgen said it beat its environment sustainability goals related to carbon, water and waste components. The company also met all elements in its clinical trial diversity objectives. ESG only constituted 5% of the entire evaluation scorecard.

In contrast to the goals Bradway met or surpassed, execution on key clinical studies and regulatory filings lagged expectations. For this item, which bore a 20% weighting, Amgen’s board decided Bradway deserved an 18.3% payout.

One notable setback came from Lumakras. The FDA in December rejected Amgen’s bid for a full approval of the KRAS inhibitor in previously treated non-small cell lung cancer after raising concerns of potential systemic bias in the drug’s confirmatory trial. As a result, the agency asked for a new confirmatory study while keeping its accelerated approval in place.

In other positive pipeline and regulatory news at Amgen, the FDA granted a priority review to the company’s DLL3xCD3 molecule tarlatamab in advanced small cell lung cancer. The multispecific obesity candidate maridebart cafraglutide is moving ahead with promising phase 1 data. The California biotech also launched Amjevita, the first biosimilar to AbbVie’s Humira, in the U.S.

All told, Bradway’s $4.3 million in nonequity incentive compensation represented a 36% jump from $3.12 million in 2022. His equity awards remained the same at $15.9 million, and his salary jumped 3.8% to nearly $1.8 million.