Merck CEO Robert Davis has cracked the $20 million mark in annual pay for the first time, putting him in an exclusive club of biopharma heavy hitters.
Davis, 57, who took over as CEO in 2021 and as chairman the following year, received a 9% bump in pay in 2023 to $20.3 million, according (PDF) to the company’s proxy filing.
Davis joins Johnson & Johnson’s Joaquin Duato ($28.4 million), Eli Lilly’s David Ricks ($26.6 million), AbbVie’s retiring Richard Gonzalez ($25.7 million), Pfizer’s Albert Bourla ($21.6 million), AstraZeneca's Pascal Soriot ($21.3 million) and Vertex’s Reshma Kewalramani ($20.6 million) in the $20-million-plus club for 2023.
The pay increase for Davis came in a year in which Merck’s market cap fell by 2% amid nervousness about the drugmaker’s reliance on Keytruda, which loses patent protection in 2028. The cancer superstar was the world’s top-selling drug last year, generating $25 billion. In the fourth quarter, Keytruda accounted for 45% of Merck’s revenue.
The company’s fortunes will likely hinge on how Davis’ acquisitions pan out. Four months into his tenure, Merck bought out Acceleron for $11.5 billion. A year later, the company scooped up Prometheus and its bowel disease candidate PRA023 for $10.8 billion.
Last month, Merck gained FDA approval for potential blockbuster Winrevair (sotatercept), a pulmonary arterial hypertension therapy, which was gained in the Acceleron deal.
Davis compensation increase in 2023 came despite a drop in his bonus from $4.1 million to $3.6 million. His equity awards however increased from $11.4 million to $14 million, while his salary was up from $1.54 million to $1.60 million.
Davis came to Merck in 2014 to serve as chief financial officer. His role expanded over the next seven years before taking over for CEO Ken Frazier on July 1, 2021. In that year, Merck paid Davis $13.7 million and Frazier $15.2 million. Compensation for Frazier, who was CEO for 10 years, maxed out at $27.6 million in 2019 when he was the third highest-paid chief in biopharma.
Merck’s other top execs received hefty pay increases in 2023. Chief financial officer Caroline Litchfield saw a total compensation increase from $5.9 million to $8.3 million. R&D chief Dean Li, M.D., Ph.D., was paid $9.8 million overall in 2023, up from $7.8 million.
In the proxy, Merck explained that its varying pay increases for its executives "demonstrate a strong linkage between pay and performance."
"A significant portion of our [executives'] pay is variable and at-risk, subject to company performance as measured against financial, operating and strategic objectives, as well as relative total shareholder return," the company added.
Merck’s animal health president Richard DeLuca made $6.2 million, up from $5.6 million in 2022. In his first year as manufacturing chief, Sanat Chattopadhyay was paid $6.2 million.