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.