After cost-cutting spree, Teva chief Schultz nabs big pay bump to nearly $16M

Kåre Schultz
Teva credited Schultz's pay bump to a successful two-year cost-cutting initiative that slashed the generic maker's spend base by $3 billion. (News Oresund/CC BY 2.0)

In the aftermath of a multi-year cost-cutting spree, generics juggernaut Teva Pharmaceutical Industries has handed its CEO a sizable pay increase.

Kåre Schultz's pay package swelled to $15.72 million last year—a 35% jump over the $11.6 million he pulled in during 2019. His salary hovered steady at $2 million, and the bulk of his 2020 pay came from nearly $10 million in stock options, Teva’s 2021 proxy statement showed.

That boost to Schultz’s stock awards, which landed at about $6 million in 2019, came courtesy of the company’s investors. At Teva’s annual shareholder meeting last year, shareholders OK’d an extension of Schultz’s tenure by another year, for a total of six in the chief executive seat. He’ll now remain on board at the Israel-based generics giant until at least November 1, 2023.

In line with that, shareholders also approved an increase to Schultz’s long-term incentive equity award from $6 million to $10 million a year—all tied to pre-established performance metrics.

The reasoning behind the pay bump? Over the past several years, Schultz has successfully navigated the company's two-year restructuring plan and slashed the company’s spending base by $3 billion, the proxy said. He also helped reduce the company’s debt and oversaw the launch of several new products, Teva said in its SEC filing.

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With its cost-cutting spree concluded, Teva has gone all-in on its migraine prevention med Ajovy and its Tardive dyskinesia drug Austedo. The FDA last January approved an autoinjector to deliver Ajovy, helping to level the playing field with rivals from Amgen and Eli Lilly. The drug ginned up $183 million in 2020, below the company’s expectations and sales for rivals, though Teva predicts Ajovy revenues could reach $300 million this year.

Austedo, for its part, generated $638 million in 2020, falling just short of Teva’s own revenue projection. The drug could be inching closer to blockbuster territory, however, with Teva forecasting roughly $950 million in sales this year.

On the asthma front, the company launched a trio of its app-connected Digihalers in the U.S. last year. Truxima, Teva’s rituximab biosimilar, has captured a 24% market share since its rollout in late 2019, the company said. 

Altogether, the company generated $16.7 billion in 2020 revenues, slightly below the $16.8 billion it posted in 2019. COVID-19 took a bite out of sales, while the decline of Teva's multiple sclerosis blockbuster Copaxone and certain oncology and respiratory products also played a part in the dip, Teva said. 

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Meanwhile, Teva has been working through pricing issues and opioid litigation. In September, Schultz joined former Celgene chief Mark Alles and Bristol Myers captain Giovanni Caforio to testify before the House's Oversight Committee on pricing and competition in the industry. Around the same time, the committee published a report spotlighting Teva's history of price hikes for Copaxone, its efforts to fight potential pricing reform and its designs to fend off competition. 

The company is also among a group of drugmakers facing a virtual trial in California over allegations that they downplayed the risks of opioid addiction to boost sales of their pain meds. Santa Clara, Los Angeles and Orange counties, plus the city of Oakland, are seeking a whopping $50 billion in damages from four companies.