Merck & Co. CEO Ken Frazier didn't match his 2014 record compensation last year. But he didn't fall far short: Frazier's 2015 earnings amounted to $24.2 million, compared with $25 million the previous year.
What changed? The biggest line-item shift came in stock awards, valued at $13 million in 2014, which fell just shy of $10 million for 2015.
On the positive side of the ledger, Frazier racked up slightly more cash incentive pay at $3.4 million compared with $3.3 million. He also collected $4.8 million in options, up from $3.3 million in 2014.
Merck's financial performance "exceeded expectations," the company said in its proxy statement, though revenue came in essentially flat ex-foreign exchange effects. Cost cuts helped boost earnings per share 13 cents above Merck's target of $3.40, the compensation committee calculated. Of all the criteria Merck's pay plan uses, that beat yielded the biggest share of Frazier's equity awards.
Last year, Merck said it had beat its goal of saving $2.5 billion in annual costs under a plan announced in 2013. According to the proxy filing, Merck had 61,000 employees worldwide as of December 31, down from 70,000 at the end of 2014. (Joint venture sales account for at least some of that difference.)
R&D also helped Frazier rack up incentive pay, with ahead-of-schedule approval for the cancer immunotherapy Keytruda in lung cancer and a schedule-beating filing for its hep C cocktail Zepatier. A series of other approvals, including EU and Japanese nods, gave him points as well.
Frazier's pension earnings also grew significantly, to $4.3 million from $3.6 million. And his other compensation--including car and driver, home security, retirement savings matching and tax prep--ticked upward to $283,000 from $197,000 in 2014.
Holding steady was Frazier's base salary of $1.5 million, a common figure across Big Pharma this proxy season. Overall, Frazier's compensation fell in line with Johnson & Johnson CEO Alex Gorsky's $23.8 million package and a couple of million ahead of Allergan CEO Brent Saunders' $21.6 million.
- read the Merck proxy