Merck has handed out another hefty raise to CEO Rob Davis, boosting his compensation by 13% to $23.2 million in 2024, according to the company’s 2025 proxy statement.
Since taking the reins from former helmsman Ken Frazier, Davis has seen his pay scale up quickly, from $13.7 million in 2021 to $18.6 million in 2022 and $20.3 million in 2023.
The compensation package for Davis measures up to those for other U.S. pharma honchos last year such as Eli Lilly’s David Ricks ($29.2 million), Pfizer’s Albert Bourla, Ph.D., ($24.6 million), Johnson & Johnson’s Joaquin Duato ($24.3 million) and Gilead Sciences' Daniel O’Day ($23.7 million).
Breaking down Davis' 2024 compensation, the pay package included a salary of more than $1.6 million and equity awards totaling $17.7 million, which were up from $14 million in 2023. Davis’ bonus has declined each of the last two years, from $4.1 million in 2022 to $3.6 million in 2023 and $2.8 million in 2024.
In justifying Davis' equity award boost, Merck's compensation committee wrote that the move resulted from an increase in the CEO's long-term incentive grant value “based on a review of his performance and the competitive positioning of his compensation relative to the primary and supplemental peer groups.”
“Consistent with our compensation strategy that supports a pay-for-performance culture, the board intends to continue to adjust Mr. Davis’ compensation, and when appropriate, increase it to ensure it remains competitive to these peer groups and aligned with the board’s assessment of his business performance and leadership,” the compensation committee said.
Based on common measuring sticks for chief executives, it’s not easy to assess Merck's leadership trajectory under Davis, 58.
During his tenure, Merck's revenue has increased 32%, from $48.7 billion in 2021 to $64.2 billion last year, but most of that boost can be attributed to the juggernaut trajectory of Keytruda. Sales of the cancer superstar reached $29.5 billion in 2024, up from $17.2 billion in 2021.
At the same time, Merck’s value—as reflected in its market cap—is similar today ($200 billion) to the figure when Davis took over ($197 billion) on July 1, 2021. Merck’s market cap maxed out at $334 billion in March of last year before a reversal in the momentum of the company’s second-leading product, HPV vaccine Gardasil, which saw double-digit sales decreases in 2024's third and fourth quarters.
With an administration change, concern has ratcheted up for Merck, as well. Last week, an investor note from UBS identified Merck and AbbVie as having the most exposure to potential tariffs that could soon be imposed by President Donald Trump, thanks to the scope of the companies' manufacturing operations overseas.
And, as with other drugmakers that depend heavily on their vaccine businesses, anxiety is mounting over the potential effects of anti-vaccine advocate Robert F. Kennedy Jr.'s leadership of the Department of Health and Human Services.
Meanwhile, among Merck’s other top execs, animal health chief Richard DeLuca collected $9.1 million in 2024, which was up from $6.2 million in 2023. Dean Li, M.D., Ph.D., EVP and president of Merck Research Laboratories, received $10.1 million. In her first year as chief human resources officer, Betty Larson was paid $11.3 million. Chief financial officer Caroline Litchfield saw a decline in her pay from $8.3 million to $7.5 in 2024.