Heavy lies the head that wears the crown, they say. And in truth, biopharma CEOs at all levels are tasked with tough decisions and critical timelines — but they are also well compensated.
Often, the bulk of that compensation is a direct result of a company’s performance. For instance, Pfizer CEO Albert Bourla, who led the pharma giant through the successful development of the first approved COVID-19 vaccine, pulled in a total of $24 million in 2022, according to the company's 2023 proxy statement.
Breaking Bourla's paycheck down, though, reveals that his salary was a fraction of that total at about $1.7 million. The rest came in the form of an $8 million bonus, $7 million in stock options and $6 million awarded as stock. The success of the company and its shareholders as a result of the CEO's actions resulted in a massive payout.
But even a company that has struggled in the last few years — like Biogen in the wake of the Alzheimer's drug Aduhelm's market failure — can find itself dishing out big bucks to its top dog. New CEO Christopher Viehbacher pulled in more than $30 million despite a salary of only about $154,000 in 2022, mostly in stock awards and options. And Michel Vounatsos, who announced his departure from the top position in May 2022, made more than $26 million for the year.
Of course, these are two of the largest biopharma companies in the world, and exercising shares can be a major win for executives — to an eyebrow-raising degree. Leonard Schleifer, the head of Regeneron Pharmaceuticals who’s well-known for being the best paid CEO in the industry, brought in more than $135 million in 2021, prompting many to question how much a CEO can really be worth.
Even at smaller biotechs, where margins are razor thin and share price can be volatile at best, a competitive CEO package undoubtedly attracts top talent. But sometimes, the top executive would rather collect based on the performance of the company than rake in a salary much higher than that of their employees. At Corvus Pharmaceuticals, an early-stage biotech focused on cancer, CEO and co-founder Dr. Richard Miller is trying to find the balance by mostly foregoing a salary for stock options.
While Miller is not the first or only chief executive to take a massive salary reduction, his decision is a risky bet on the future success of the company. But as a physician and scientist whose prior achievements include the development of Big Pharma blockbusters like Rituxan and Imbruvica, Miller sees the sacrifice as an indication that he believes in what the company is doing — and hopes others in the biotech industry will follow suit.
Tying it to the work
In 2021 and 2022, Miller received a base salary of $300,000, with option awards and other compensation totaling about $524,000 last year and just over $905,000 in 2021.
The argument for huge compensation packages for CEOs is that attracting talent at the top requires a high incentive. After all, there's no shortage of opportunities for executives in the space, especially for someone like Miller who’s notched numerous Big Pharma successes.
"Pharmaceutical executives are very well paid — it's a very profitable and successful industry," Miller said. "It's also a very technical industry, and these are people who are very well educated with many advanced degrees."
"You have CEOs paying themselves a million bucks a year, giving themselves bonuses whether they perform well or not."
CEO, co-founder, Corvus Pharmaceuticals
But in a bet on Corvus, which launched in 2014 and went public in 2016 with a stock price that has dwindled since its initial heyday, Miller asked the board to cut his salary entirely. They ultimately agreed to an annual base of just under $35,000.
"My decision to forego most of my salary in exchange for stock is similar to my colleagues here at Corvus, because we believe in our products and we know this is a difficult time for the biotech industry," Miller said. "We want to help develop these products and drive the science forward for patients, and we're willing to sacrifice on the cash compensation in exchange for options and stock."
Miller said that 35% of Corvus stock is owned by the board of directors and the company's employees and that he has "never sold a single share."
"I also did this because I think it sends a great message to shareholders, aligning my interests with their interests," Miller said. "It also sends a great message to our employees that I believe in our products, the science that we're doing and the effort that we're making."
The company's lead drug candidate is a checkpoint inhibitor called CPI-818 that blocks the interleukin-2-inducible T cell kinase, known as ITK, to treat patients with blood cancers like lymphoma. And although the candidate is only in a phase 1b trial, Miller said it could be a "paradigm-shifting agent" — enough so to put his livelihood on the line.
"I'm not independently wealthy and I like to make money as much as anybody else, but I'm here because I think that we've got some really great products," Miller said.
Responding to the market
A wobbly biotech market has caused leaders at clinical-stage companies like Corvus to rethink their strategies on compensation and not follow the hungry playbook that companies have traditionally used, Miller said. Part of the problem during the biotech boom prior to 2021 was over-paying and under-performing on the science side.
"Something that troubles me in biotech now is that so many of these companies are working on me-too stuff that's been out there for years already," Miller said. "And especially during COVID in the last few years, they were able to raise tons of money on not very much clinical data."
And these large payouts continued even through the deflation of the biotech bubble, reflecting a blindness on the part of executive management, Miller said.
"Your management teams at some of these biotech companies have become entrenched, and investors aren't paying attention — you have CEOs paying themselves a million bucks a year, giving themselves bonuses whether they perform well or not," Miller said. "It's amazing to me when your stock has gone from $40 to $1 and you're giving yourself an 80% bonus."
Still, Miller isn't an advocate of disincentivizing top talent in the biotech industry. Instead, he wants to show decision-makers that there’s another way beyond the status quo.
"You have compensation committees that are asleep at the switch," Miller said. "But this is a delicate balance because we're in an industry where attracting talented people is key, and one person can make a huge difference."
For a CEO who has a few blockbuster development programs under his belt, Miller would much rather see successful data than the trappings afforded by only the wealthiest of biopharma executives, he said.
"I like the science and the medicine, so for me, I get more fun out of a new clinical trial than buying a new table for my boardroom," Miller said.