Chairman and CEO, Eli Lilly
2016 compensation: $18.37 million
When John Lechleiter retired as Eli Lilly CEO at the end of last year, the company was reeling from the failure of its long-anticipated Alzheimer’s compound solanezumab and facing falling demand for key blockbusters like cancer drug Erbitux and erectile dysfunction treatment Cialis. But the Lilly lifer nonetheless collected a top-ranking compensation package as he handed over the reins to David Ricks.
Lechleiter, who served as nonexecutive chairman through May 2017, took in a total of $18.4 million in compensation last year, according to its proxy statement. That bested his 2015 pay by nearly $2 million, with the increase stemming from a $3 million boost to his pension.
That change in Lechleiter’s pension value helped offset the year’s disappointments. In 2015, Lechleiter’s stock awards rose a remarkable 69%, a reward for the 73% gain in Lilly’s share price from 2013 to 2015. Last year, though, Lilly’s stock fell about 12%, reflecting earnings misses. Lilly said in its proxy filing that the company exceeded its targets for revenue and pipeline progress but “narrowly missed” its earnings-per-share target.
That translated into a drop in incentive pay to $2.6 million from $3.6 million in 2015, and a 3% decline in stock awards to $11 million.
Lilly suffered some setbacks in 2016, and faces trouble ahead, thanks to patent losses on some of its bigger meds. The solanezumab failure took a major toll, prompting the company to cut 485 jobs to get control of its expenses. In the fourth quarter, the company’s non-GAAP earnings of $1 billion, or 95 cents per share, missed analyst estimates by 3 cents. For the full year, sales rose 6% to $21.2 billion and EPS nudged up 3% to $3.52.
Lilly’s diabetes unit is performing moderately well, as its new GLP-1 drug Trulicity picks up steam and SGLT2 drug Jardiance continues to win over physicians and patients—and won an FDA label boost for cutting cardiac death risks. Its psoriasis drug Taltz hit the market, and quickly began to win share from Novartis’ rival med Cosentyx.
But demand for Cialis was falling as the year drew to a close, and its 6% sales increase for the fourth quarter came entirely from price hikes. What’s worse, Cialis is set to lose patent protection in the U.S. and Europe this year—along with U.S. patent losses for the blood thinner Effient and ADHD med Strattera, which is expected to go into freefall, according to EvaluatePharma, with sales dropping to $13 million by 2022 from $535 million last year.