The compensation cost of Teva Pharmaceutical Industries (NYSE: TEVA; TASE: TEVA) CEO Richard Francis totaled $25.7 million in 2023 (NIS 96.6 million at the current exchange rate). Most of the cost, $19 million, was in the form of stock-based compensation awarded to Francis when he joined the company last year. Francis replaced Kare Schultz in early 2023, and, according to Teva’s filing, last year’s stock-based compensation included $10 million allocated to Francis as an incentive to join Teva and to compensate him for pay he would have received from his previous employer. It consists of a performance-based allocation of restricted shares with a fair value of $5 million at the grant date and a further allocation of restricted shares that will mature in three installments over three years, on condition that Francis stays with the company.
Besides the stock-based compensation, Francis’s basic annual salary as set out in the employment agreement published when he joined Teva was $1.6 million. He received an annual bonus of $1.5 million, a first instalment of a $5 million bonus promised to him when he joined the company, and a further $2.6 in non stock-based compensation. A further amount of $1 million in other costs was recognized, covering housing, relocation to Israel, a car, and other items.
Francis thus becomes the highest paid among executives at Tel Aviv Stock Exchange listed companies. Nice Systems CEO Barak Eilam received compensation costing $24.5 million in 2023, of which $22.6 million was stock-based compensation.
In 2022, the compensation cost of Teva’s previous CEO, Kare Schultz, was $15.5 million, and over his entire period at the head of the company (from November 2017 to the end of 2022) it totaled $107 million. In his first year at Teva, Schultz received higher compensation, which included a cash grant of $20 million and an allocation of shares on joining the company.
Teva’s CFO Eli Kalif received compensation costing $4.9 million last year (up from $4 million in 2022), of which $3 million was stock-based; Executive Vice President, International Markets Commercial Mark Sabag’s compensation cost was $3.7 million (down from $3.9 million in 2022), of which $2 million was stock-based; Executive Vice President, European Commercial Richard Daniell’s compensation cost was $5.2 million; and that of Executive Vice President Global Operations Eric Drapé was $4.3 million.
Shareholders protest against pay levels
The figures are released as part of the announcement of Teva’s annual shareholders’ meeting, which will take place on June 6. The shareholders will be asked to extend the terms of several directors, and to approve the compensation packages of Teva’s executives, in what is known as the "say on pay" motion that companies listed in the US are obliged to bring to a vote by their shareholders, enabling the shareholders to express their opinions on the matter. The vote does not bind the company, unlike the vote on compensation policy under the Israeli Companies Law. Last year, most of Teva’s shareholders voted against the say on pay motion, in protest against the high compensation levels in relation to the performance of the company’s stock at the time.
In 2023, Teva’s share price rose 14.5%, and it has risen a further 25.4% since. The company has returned to growth after several difficult years, and now has a market cap of $14.8 billion.
FDA approval
Meanwhile, Teva has reported that, together with Alvotech (Nasdaq: ALVO), it has received approval from the US Food and Drug Administration (FDA) for Selarsdi, an injection for subcutaneous use, as a biosimilar to Stelara, for the treatment of moderate to severe plaque psoriasis and for active psoriatic arthritis in adults and pediatric patients aged 6 years and over.
"The approval of Selarsdi, which is our second biosimilar approval this year, underscores Teva’s commitment to expanding the availability, access and uptake of this important treatment option to patients in the US," said Thomas Rainey, Senior Vice President, US Market Access at Teva. "The biosimilars market is growing, both globally and in the US, and biosimilars are a key component of delivering on Teva’s Pivot to Growth strategy. The partnership model that we’ve established enables us to leverage our commercial presence and experiences globally as we move to bring additional biosimilars to market."
Sales of Stelara in the US were nearly $7 billion in 2023, according to Johnson & Johnson’s financials, as cited by Teva.
Published by Globes, Israel business news - en.globes.co.il - on April 17, 2024.
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