Merck, during a transition year, doled out nearly $30M to its pair of CEOs

With Merck taking the reins from retiring CEO Ken Frazier and handing them to Robert Davis at the exact midway point of 2021, how would the New Jersey-based drugmaker divvy up their pay for the year?

Merck has answered (PDF) the question with the release of its SEC proxy statement.

Frazier, who served a decade as CEO before stepping down on June 30, received a compensation package of $15.2 million in 2021. Davis, the company’s former chief financial officer who took over on July 1, was rewarded with $13.7 million.

In an unusual bit of symmetry, while Davis saw his pay package increase by $6.9 million last year, Frazier saw his decline by the same amount. Davis was paid $6.8 million in 2020, while Frazier made $22.1 million.

Frazier, who has continued as Merck’s chairman of the board, maxed out his pay in 2019 when he received $27.6 million, making him the third highest-paid CEO in pharma that year. The company’s board was so enthused with his work that to keep him in charge it waived its maximum age (65) for the job.

But less than a year later, change was afoot at Merck, starting with the announced departures of Frazier and R&D chief Roger Perlmutter. The company had struggled through a trying 2020, failing to develop a COVID-19 vaccine, and with mega-blockbuster Keytruda dominating Merck’s thin portfolio of drugs, a new approach was sought.

Frazier’s 2021 pay included a salary of $1.48 million, equity awards totaling $10.6 million and non-equity incentive compensation of $2.80 million.

Meanwhile, Davis’ pay included a salary of $1.32 million, equity awards of $9.1 million and non-equity pay incentive compensation of $2.83 million.

As for other Merck execs, Caroline Litchfield, who took over Davis’ chief financial officer duties on July 1, earned $4.22 million in 2021. Animal heath chief Richard DeLuca was paid $6.84 million, while Merck Research Laboratories leader Dean Li made $5.48 million.

Human health chief Frank Clyburn, once believed to be a contender to replace Frazier, earned $9.92 million in 2021. The company announced Clyburn’s departure earlier this year. He has taken over as CEO at International Flavors & Fragrances.