Eli Lilly CEO David Ricks, in his second year on the job, snared a pay package larger than those of a few of his Big Pharma peers. And it’s not far shy of the amount his predecessor, John Lechleiter, hauled in for his final—and eighth—year as Lilly chief.
Ricks’ salary stayed the same at $1.4 million, while his stock awards—which made up the majority of his pay in 2017 and 2018—grew slightly to $10.58 million. The CEO’s cash incentive pay took a big leap, however, to $3.6 million from $2.8 million in 2017. His pension value accounted for about $1.5 million, while “other compensation” came in flat at $84,000.
All told, Ricks nabbed $17.23 million in 2018 compensation, up 9% over his first-year package of $15.85 million. He joined the company in 1996 and became CEO in January 2017.
For comparison’s sake, Lechleiter racked up $18.4 million for 2016, his last year in the CEO chair. His pension accounted for a big chunk of that package at $3 million.
In its latest proxy filing, Lilly says its executive pay is made up of an annual salary, plus a cash bonus based on financial and pipeline performance, plus two performance-based types of equity incentives that measure how the company is doing against a peer group.
And while some companies shell out on personal travel for executives, Lilly didn’t record any costs from Ricks’ personal travel last year. He “did not receive any other perquisites,” the filing says.
How does Ricks’ pay stack up against that of his big pharma peers? AbbVie recently reported that its chief executive Richard Gonzalez pulled in $21 million last year as megablockbuster Humira continues to soar. Sanofi, working through some problems of its own, paid its helmsman Olivier Brandicourt $8.2 million last year, a 25% decline. AstraZeneca CEO Pascal Soriot’s pay climbed to nearly $15 million, and new Novartis helmsman Vas Narasimhan earned a pay package worth nearly $10 million in 2018.
Aside from financial performance, Lilly’s drug launches and R&D advances are among the factors that determine executive pay, the company said. In 2017, Ricks also “drove a cross-company productivity agenda that funded increased investment in research and development and allowed above-plan capital return to shareholders,” according to the proxy. That’s likely a reference to the thousands of layoffs Lilly put through in recent years to save $500 million annually. Most came in the form of early retirements.
The company also released its CEO-to-worker pay ratio and disclosed that its median employee compensation last year was $91,246. Ricks made 189 times that amount.
Ricks’ pay bump came during a year of ups and downs for Eli Lilly. As its important diabetes business continues to suffer from U.S. pricing pressure, the company is looking for new launches to pick up steam. Approved in 2016, immunology drug Taltz is nearing blockbuster territory with 2018 sales of $937 million.
New cancer drug Verzenio and another immunology launch, Olumiant, are starting to record meaningful sales, as well, each reaching more than $200 million in 2018. Looking ahead, Lilly expects CGRP drug Emgality to serve as a cornerstone of a new migraine and pain franchise.
The company rolled out 2019 revenue and earnings projections in December that excited investors, but in the weeks that followed, Lilly bought Loxo Oncology and suffered a surprise trial failure for soft tissue sarcoma drug Lartruvo. While the Loxo buyout was a planned development, its $8 billion cost will eat into 2019 earnings, Lilly said.
All told in 2018, Lilly grew sales 7% to $24.56 billion. Net income for the year came in at $3.23 billion after a $204 million loss in 2017.