There is nothing like a list to engage people. And a favorite sport, of course, is tracking the extent to which this or that ceo is doing a good or lousy job - and then making a list. That is what24/7 Wall Street has done by comparing total compensation with stock performance. The list focuses on the highest paid ceo's in 2010 whose stocks performed the worst, and had the largest price drops.
So who showed up? Three are from drugmakers. Coming in at No. 8 was Amgen ceo Kevin Sharer, whose total compensation was $21.2 million. The biotech suffered a 3 percent decline in share price. The drop reflected concerns about the vulnerability of the flagship Epogen and Aranesp anemia meds. To appease investors, Amgen declared its first-ever dividend earlier this year and is now restructuring (see here and here). More details of the reorganization, in fact, are expected later today. But will this be enough? At No. 7 is Bill Weldon. The Johnson & Johnson ceo suffered a bad year in 2010 - a seemingly endless list of product recalls due to manufacturing blunders that closed a plant for retooling; prompted Congressional hearings and government probes; layoffs; an FDA consent decree; a loss of valuable shelf space and lost sales. His total 2010 compensation was $28.7 million while J&J stock fell 4 percent. More recently, J&J fended off a derivative shareholder lawsuit (read this) and seems to have regained Wall Street confidence. But how long will it take for J&J to fully recover?
And placing fourth is Miles White, the Abbott Laboratories ceo. Last year, his total compensation was $25.6 million while the stock sank 11.3 percent. The drug and device maker was hurt by a lack of big, new products and a study showing its Niaspan pill failed to reduce the risk of cardiovascular events (look here). Meanwhile, revenue rose to $35.2 billion last year from $30.8 billion, but net income fell to $4.6 billion from $5.7. Last week, White announced plans to split the company in half, since the drug biz seemed to drag down overall valuation.
Will this be sufficient? One analyst, Larry Biegelsen of Wells Fargo Securities, offered some caution in an investor note today. The split, he writes, would help the pharma pipeline gain visibility, but the research-based pharma biz, which will feature a portfolio of existing meds, will be heavily dependent on the Humira arthritis med; it will account for 60 percent of sales and 73 percent of operating income in 2015. He adds that the drug pipeline has meds "just entering" Phase III, suggesting risk remains and Abbott, he adds, has a recent track record in developing drugs that has been "poor." Moreover, there are no major launches until at least 2014. And he also thinks that Abbott set "unrealistically high growth expectations" for the device biz.
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I tend to prefer the analysis by Forbes.com. Based on their analysis, neither Weldon, White or Sharer make the top 50. In fact Sharer doesn't even make the top 200.
http://www.forbes.com/lists/2011/12/ceo-compensation-11_rank.html
Further to that point--JNJ stock is basically the same price now as October 2006, about $6 off the pre-crash high & $15 above the post-crash low. Seems like a text book definition of "fully recover."
copharm:
It would seem the metric was value to the shareholders relative to the size of the ceo package ... not a numerical ranking by total comp.
As Mark Twain wrote - "Facts are stubborn things but statistics are much more pliable."
OII, this is why as a manager in my late 20s, I am strongly considering getting out of the pharmaceutical industry. Too much scrutiny and no recognition, especially as a manufacturing operations & logistics guy. The finance and marketing guys get all the credit. I think I'll be much better off in E-Commerce or the upcoming boom of nuclear power (mining equipment in 3rd world countries, etc.).
I hobbled my way to the JNJ shareholder meeting and gave a speech to CEO William Weldon, the JNJ Board, and the shareholders about their drug Levaquin which has caused devastating injuries to so many people. Weldon actually came over to me after the speech and sat down with me. I asked that the company engage in medical research to help people severely injured by Levaquin regain some of their lost health. Many people have been disabled for years. No response from Mr. Weldon or the board. The JNJ shareholders clapped loudly after the speech. They were very conscientious over this issue. The Board Directors have remained silent. I made sure my speech was civil and respectful despite my Levaquin injuries. I wish Mr. Weldon would not always put profits before people. The JNJ credo mentions patients of their products are the company's highest responsibility. John,
John F. "I wish Mr. Weldon would not always put profits before people."
Surely you jest. This is a typical pharmaceutical.
Betsy, I guess I shouldn't be so optimistic. I figured if Mr. Weldon took the time to come over at the shareholder meeting to sit down and talk with me, he would have at least done something about the situation. I talked with him and gave him a packet of literature from medical doctors on the severe and long term injuries from Levaquin. I gave Mr. Weldon a copy of a Levaquin documentary film called "Certain Adverse Events" I think because the JNJ shareholders clapped loudly he felt as though he had to come over and sit down with me after the shareholder meeting. I gave Mr. Weldon some other literature on my personal situation. Mr. Weldon said he was sorry about what happened to me from Levaquin. He said their sales force tries to tell doctors about these potential severe reactions. Mr. Weldon told me he would look into this. At the time, I thought Mr. Weldon was being genuine. I realize now that he was mainly just doing damage control. I have written "open letters" to some of the JNJ Board Directors about JNJ engaging in medical research to try and help us get better. It is on my Levaquin blog at "Levaquin Hurts" No response from any of them. I didn't expect one though. My mother is a retired RN, and she has written to Mr. Weldon as well. I am working on a shareholder resolution for the 2012 JNJ shareholder meeting. I am going to try and make it to the 2012 shareholder meeting to give another speech to the JNJ Board and shareholders. I think JNJ is trying to deny me an opportunity to speak at the 2012 shareholder meeting. No response from their corporate secretary so far regarding my letter requesting to speak at the shareholder meeting.
Warn your family about Levaquin. These severe and devastating long term reactions are not rare. There is a good recent news segment on PBS about Levaquin. Google "PBS Levaquin" and it will come up. Sincerely, John
THE NEW ARISTOCRACY WITHOUT ANY STYLE OR SUBSTANCE OF ARISTOCRATS. WHERE DID WE GO WRONG AS PEOPLE OF THIS PLANET?
John, at a shareholder meeting years back, Jeff Kindler, CEO of Pfizer promised a "very distressed" elderly shareholder thatb he would "personally" look into the discontinuation of Viagra ads during prime time since Kindler himself was a gramps. As expected, absolutely nothing changed, except old Jeff's subsequent job status. Don't hold your breath.
For context about Miles White's compensation, you need to know what a lousy CEO he has been, as outlined in this recent Forbes article: http://www.forbes.com/sites/adamhartung/2011/10/19/avoid-the-3-card-monte-sell-abbott/
Basel, if you ever lighten up you should look into the standup comedy routine called "The Aristocrats". Starting in vaudeville, it is the longest running standup routine in comedy history. WARNING: not for sensitive ears.
Thanks Betsy and Original Insider,
You're right, I shouldn't hold my breath. I will just try and work on getting media attention to this problem. I won't hold my breath of getting my hopes up for this either as it is difficult. I am glad PBS did a big story on it.
Thanks, John
I am so sorry, John F., about your reaction to Levaquil AND then to have suffered the indignity of being ignored by the company. I make snide remards such as the one I 1st made in this blog and am sometimes sorry that I do this. On the other hand a bigger issue is at stake, and SOMEone has to be snide.
This all reminds me of Ford, many, many years ago who made an engine mounting that, when hit from behind, caused the car to burst into flames. They knew it was dangerous, but it was cheaper to mount it this way. TO HELL WITH THE FOLKS THAT DROVE THESE CARS.
We are A NATION DEVOTED TO THE BOTTOM LINE. This cannot be news to any of you, but as most of you know, I've heard from over 25,000 patients in the past 20 years who have told me stories about doctors - not even pharmaceuticals - who don't really care about their patients any more than pharmaceuticals do, and regular folks - neighbors and relatives - treat their friends and kin similarly. WHAT HAS HAPPENED TO OUR SOCIETY?
Would anyone here care to write a book about this with me? I once wrote about doctors and couldn't get a publisher to accept it, because "we must be nice to doctors." Do not throw up until you've left this blog. A couple of terrific books HAVE been written & published now about doctors by people more famous than I, but I doubt if anyone's listening. OK. OK. So who would listen to our book about our society? Does anyone recognize their own callousness?
Hel-l-l-l-lp-p-p!
betsy
Betsy, we do need help as individuals, society and planet, but it ain't coming from anyone, yet. One can write an article in a journal, paper, magazine and even a book and it still makes no difference. No one is listening or cares about. Any type of exposure including TV, movies and lately bloggs serve the same purpose, ENTERTAINMENT for those who watch or read. THAT IS IT. Yes there are thankfully, people like you (Insider et al would not agree for they are people like them) and when we start again, you et al will be the ones to get it going well again. However for the new start we need a complete collapse of the current socio-economic system and we are well on the way, having been on the slippery slope for sometime with half measures that are trying to save the system but in reality they are just prolonging the agony of final result. You are also right about the docs. They are never mentioned or accused in the contest of bigpharma wrongdoings. Funny if they, the docs would not go along and take the bate, bribes, payoffs, gifts, travels and who knows what else the bigpharma would never be able to do what they do, lie, cheat, bribe, defraud, steal etc etc. You know the drill.
Oops. I meant LevaquiN.
Per Basel Lair, "we do need help as individuals, society and planet, but it ain’t coming from anyone, yet."
I totally agree. My email address has "kindness" in the first part, and my former license plate, before we recently moved, read "PLS B KIND" Big deal. Does anyone understand the concept of "kindness" (note quotation marks) or that they are NOT kind, whatever THAT is?
Do any of you understand Yiddish? All I have to say is, "veyizmir." (Sh-h-h - don't mention this to my new & anti-semitic neighbors.)
Basel, you'll have at least 1000 new Komrades nearby helping you reinvent the planet since Novartis will soon be lightening their Swiss workforce by about 1000 FTE's. Then again, when my ex-wife used to complain the inertia of your countrymen (to which you have alluded) she would always be told "It's Swiss". I never understood what that meant. Maybe you could help enlighten.
Better even to ask "Which drugmakers DO NOT have overpaid CEO's?" Alaskan fishermen deserve a higher pay than these clods.
Not to generalize, of course...
Basel, I feel your pain and agree with your sentiment. An answer to your question is this: it was all downhill since we began revering GDP as a cut and dry indicator of "progress," that wins elections, as the sheeple are fat beyond programmed to "think" with this mindset.
Does Gardicil really prevent cervical cancer as it's talked up to be, and does it (as announced recently) ALSO prevent heart disease in women too? Probably not, but let's make the $&@&$&$ crap mandatory, and ::poof:: we are more successful. Aluminum, thimerosal, and probably mercury too. And likely processed in filthy environments, as I've yet to see a blazingly fast paced manufacturing schedule that doesn't skimp on things such as assuring sterility of products, limiting or eliminating residual solvents where applicable, etc.
What will they do next, recommend it for males too? Oh crap, wait... Naah, it can't be.
Yes, they do have the gall, and yes, we are that far off course.
Quicksilver, many pharma CEO's are underpaid. By that I mean the hundreds of start-up, specialty and small biotech companies that many entrepreneurial CEO's have started with a significant contribution of their own funds. We don't hear about those who failed. These guys have put significant skin in the game, and I have had personal experience with some of these guys, who have more cojones than most of us will ever will. In the unlikely event that they succeed in bringing new drugs to people and value to their shareholders, they deserve every cent they earn IMO.
It would be great if the people pulling for an economic collapse & the ones who equate vaccination programs with fascism could have spent a few months being my parents when they were children in the 1930's, wearing several generations of ill-fitting hand-me-downs due to the glorious Great Depression & avoiding their polio-afflicted neighbors.
They didn't know how good they had it, apparently.
Quicksilver:GDP neverending increase, yes it wins elections but you forgot the even worse or to some better one: "I'll lower your taxe if elected". That gets them in for sure. But what will happen when the taxes will be so low for all including the 1% that hardly pays any already? Just look at Greece. They did not lower taxes but evaded them to such extent that it meant almost no one paid taxes to speak of. That is practicaly same as lowering the taxes we are promised by all morons who are telling us taxes are not needed and are the evil thing we must get rid of. In the end we'll end up as Greece, no money for any public good, period. Right now the 1% is sitting on untold trillions in $$ of hoarded loot in all banks they can hide it, including Swiss with paying nothing in taxes on that loot.The taxes on that ill-aquired wealth alone could pay 4 and resolve the financial crisis both in USA and Europe. No one is going after them. Is that greed or what? Not only they are the benficiaries of low taxes (Thanks G.W) but they hide every billion or trillion thay can from even token taxes they pay. How can anyone but a fanatical member of that 1% club agree with this?
Salient point: Before the Great depression life for regular folks was alredy bad it got worse with the collapse but after it got far better and was improving (middle class formed and prospered) till to about 20-25 years ago when the greedy types of pre-depression mould got lose on our economic system again thanks to "business friendly" deregulators who destroyed what was put in place to prevent another collapse like Great depression for ever. Since we as people in so called democratic countries can not bring about the change to stop the greedy from totally taking us down and since they would not let up in their march to "have it all" the collapse is inevitable since their way is self-distructing as we saw with GD in 1929. If not this time next maybe but will happen sooner or later.As then it will get worse before it gets better but it will be worth it for us, the 99%. Will we ever learn?
Basel lair: I believe what people forget about the changes over the last 3 decades is how bad the economy was in the 1970's. Deregulation--which was initiated by Carter, as few seem to remember--& tax reform helped usher in the prosperity that came later.
Now for something shocking--I agree with a lot of what you're saying. The main problem with the last 3 years is that Too Big To Fail institutions are now able to privatize reward while nationalizing risk, that is, reap the benefit of whatever it is they're doing while knowing the taxpayer will bail them out if it all goes wrong. This offends the principles of capitalism.
Sorry this is completely off-topic but seemed to need saying.
Correct diagnosis is important.
There is a lack of enforcement of law and order. Lack of justice can certainly lead to a lack of kindness.
The golden rule is "he with the gold rules".
"Deregulation–which was initiated by Carter"
Forgive me, Salient Point, but deregulation was initiated by Reagan, not Carter. His first "deregulating" act, I believe, applied to Air Traffic Controllers. And so started all the unbelieveably scary things they do now that imperil our lives.
Salient is right. People have short memories. Every generation had it tough. PhD's driving taxicabs in Boston in the 1970's was not a euphemism. Several of my friends did that when they couldn't get full time academic posts. I do have a short memory for Jimmy Carter, which I believe to be therapeutic.
Everyone is right, but it's an issue of degree.
Carter did undertake some cut backs on regulation. But radical deregulation was, indeed, Reagan policy and dwarfed anything Carter did (or, for that matter, Nixon).
JiM-We probably would disagree on what "radical" deregulation is, but thanks for pointing out that regulatory changes, most prominently in the airline industry, began under Carter.
Obviously the Reagan administration was more deregulatory than Carter's.
And now the issue, at least in Pharma, seems to be entities that have grown through acqusition, merger and other means to become "too big to Succeed."
At least if 'off-label' and patent protection go away at the same time.
Lest we forget, walk into any State Library and take a look at the hundreds of volumes of the Code of Federal Regulations. I was in the Indiana State Library in Indianapolis a few months back, and the only word I can use to describe the collection is massive. All presidents and congresses are to blame for the this mess. Once you see this collection of volumes you will undoubtedly understand why the United States is drowning in a sea of regulations, which has had the net effect of regulating us out of being a business friendly country.
In Singapore you can get a business set up within 48 hours of filing the papers, in Australian you can even open shop the same day. Try doing something like that in any state but Delaware and you'd be living in a fool's paradise.