Shire CEO Ornskov racks up $21M in pay, a fivefold leap from 2014

Shire CEO Flemming Ornskov

Shire ($SHPG) CEO Flemming Ornskov took a flying leap into the ranks of pharma's highest paid executives last year. He racked up 2015 pay of $21.6 million--a fivefold increase from 2014's mere $4 million.

Though Ornskov did score a 25% base salary increase, which kicked in last July, the biggest difference in his compensation was in the long-term incentive pay column. For 2014, Ornskov collected exactly nil. Last year, that long-term payoff amounted to $16.8 million.

For short-term incentive pay, based on 2015 results, Ornskov got a 180% payout--the maximum allowed--which amounted to $2.73 million. One-fourth of that was paid in stock, the rest in cash.

As for Ornskov's base salary, it increased to $1.69 million from $1.35 million. It was a boost that Shire's compensation committee called "atypical," but justified by Ornskov's "exceptional performance" as CEO as Shire has grown in size and complexity. His salary will be frozen for three years from here.

Shire has had a tumultuous couple of years, with its AbbVie ($ABBV) merger dropped on tax aversion worries, and, after that, a long and painful bid for Baxalta ($BXLT), which finally came through in January in a $32 billion deal. Analysts are a bit skeptical that Baxalta's worth the effort, or the price, but Ornskov believes its hemophilia meds will fit right into Shire's rare disease lineup.

Meanwhile, Ornskov made a series of smaller deals, including its GI-focused buy NPS Pharmaceuticals and eye drug maker Foresight Therapeutics, all in the service of a 2020 revenue target of $10 billion.

Here's how Ornskov's long-term incentive pay broke down this time around: About $4.5 million of that comes from a share award granted in 2013, when Ornskov took the job as CEO. It replaced some pay he gave up at his previous employer. That award vests in May, three years into the job, so the exact value on that date is an estimate.

The rest--$12.34 million--is the value of his long-term incentive shares, with their payout depending on the previous three years' performance. The board decided to vest those shares at 100% based on various performance targets.

As for new share awards for the three years ahead, Shire decided to give Ornskov about the same amount--$12.2 million, at maximum, calculated at current share prices. That will be eligible to vest in three years, based on performance.

Comparatively speaking, Ornskov's latest package puts him in the same league as Allergan ($AGN) CEO Brent Saunders, with $21.6 million in 2015 compensation, and above Pfizer ($PFE) CEO Ian Read, who racked up $18 million last year.

- read Shire's annual report

Special Reports: The 25 most influential people in biopharma in 2015 - Flemming Ornskov - Shire | The top 20 highest-paid biopharma CEOs of 2014

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