5 Biotech CEOs That Made Bank Even as Their Companies Tanked on Wall Street
May 5, 2017
By Alex Keown, BioSpace.com Breaking News Staff
CHICAGO – Sometimes when a company doesn’t perform as well for investors, a chief executive officer can still make out like a bandit and earn more than a contract provides.
A recent analysis of the biotech industry by Stat News shows five companies that rewarded CEOs with bonuses despite the fact company stock fared worse than the index average for that year. How much of a difference? Well, one CEO snagged a pay hike of 385 percent while common stock prices plunged more than 70 percent, Stat reported. That kind of disparity can be concerning, as Stat pointed out, executive compensation should be aligned with shareholder returns.
“If you took a bath on a stock, you’d rather the company’s CEO didn’t recoup a bonus big enough to buy an infinity pool,” Stat said.
1. Seres Therapeutics
Remember the CEO who received a 385 percent pay raise? Well, that was Roger Pomerantz, CEO of microbiome company Seres Therapeutics . Last year, the company’s Phase II C. diff therapy, SER-109, failed to meet efficacy endpoints. However, two days before the company announced the trial’s failure, Pomerantz and two other executives sold shares of company stock under pre-programmed trading plans and were legal, but looked suspicious to outsiders. Stat broke down Pomerantz compensation for the year, which totaled $4.3 million for 2016.
2. Pacira Pharmaceuticals
David Stack, CEO of Pacira , the maker of post-surgical pain treatments, saw his pay rise by 296 percent, while share prices were down 57 percent.
3. Ophthotech
Ophthotech has had a rough six months. The company went through a round of massive layoffs following the failure of two Phase III clinical trials and has tapped a new CEO. David Guyer, co-founder, chairman and chief executive officer, is transitioning to the role of executive chairman effective July 1. Despite all these troubles, Stat showed that Guyer saw his total compensation increase by 79 percent in 2016 to about $8.7 million. Glenn Sblendorio, Ophthotech’s president and chief financial officer, will assume the role of CEO in July. Stat said he will receive the same salary that Guyer had.
4. Endo International
Ireland-based Endo International started the year with a restructuring program focused on the company’s corporate functions and Branded pharmaceutical R&D functions. This new round of restructuring follows several restructuring rounds in 2016, including a restructuring and evolution of its corporate strategy. The company is facing challenges as its painkiller Percocet is losing market value. The company is also facing a criminal investigation into its generic drug pricing, Stat said. Despite those struggles, former CEO Rajiv de Silva walked away from the company in September with 76 percent more in compensation than he received in 2015, Stat said. When combined with a severance package, de Silva earned twice his salary and bonus payout, according to the report.
5. Cempra
Antibiotic drugmaker Cempra Inc. has had its troubles over the past year. In January, the North Carolina-based company slashed 67 percent of its workforce following the FDA’s rejection of solithromycin, an oral and intravenous drug being evaluated for the treatment of community-acquired bacterial pneumonia (CABP) in adults. While the company struggled and share prices fell more than 90 percent over the year, Stat’s analysis showed CEO Prabhavathi Fernandes saw a 60 percent increase in total compensation. Fernandes left the company right before the FDA rejected the antibiotic, but Stat said her severance package included an agreement the company will pay her salary for 18 additional months, which includes a $420,390 bonus paid out in installments.