If you thought Teva had gone big-time with its 2017 pay package for CEO Kåre Schultz, check out what it paid him in 2018.
The Israeli drugmaker forked over (PDF) a whopping $32.5 million to its chief exec, nearly doubling the sum it paid him in 2017 and marking a fivefold increase over what it paid its last CEO, Erez Vigodman, the year prior.
The key differences in Schultz’ package this time around? The lion's share was cash.
The equity piece of Schultz's pay didn't come close to the $14.23 million in stock awards he snared last year. For 2018, his stock awards amounted to $4.5 million, almost $10 million less. But Teva more than made up for it with a $20 million signing bonus.
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Teva dangled that payment, along with the big equity award, to help lure Schultz into its vacant CEO post. The company handed over the $20 million in cash in two installments last year, it said in its newly filed proxy statement, reminding investors that it had disclosed the bonus when it hired Schultz in late 2017.
It’s no surprise Teva joined the executive pay major leagues when it brought Schultz in. Company leaders—particularly chairman and Celgene vet Sol Barer—spent much of 2017 promising a “world-class” pick to replace Vigodman, who departed after a series of costly missteps, not the least of which was a doomed $40.5 billion buy of Allergan’s generics unit.
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And a “world-class” pay package came right along with Schultz, who gave up the head slot at Lundbeck to join the troubled generics giant. Aside from the bonus, Schultz also netted a $2 million salary in 2018—up from $333,333 in his first partial year at the helm—and $3.79 million in non-equity incentive pay, a line item that stood at zero last year.
Meanwhile, Teva has more than made up for its new CEO spending with the mammoth cost cuts Schultz implemented in his first year on the job. Late in 2017, he rolled out controversial plans to lay off 14,000 workers and squeeze out $3 billion in costs, a measure he said in January was progressing as planned.