Many biotech companies have profited massively throughout the COVID-19 pandemic, and their success is reflected in overall compensation increases for their CEO’s
Moderna is one of those companies. Its only product, Spikevax, has made billions for the biotech’s leaders. With the entire pharmaceutical sector earning higher mean profit margins compared to other sectors, Moderna and other large companies, such as GSK and AbbVie, are hardly alone.
Moderna is the corporate force behind the second most widely distributed coronavirus vaccine, and Stephane Bancel’s leadership undoubtedly played a pivotal role in the company’s success. While Bancel made $19.4 million in 2022, his base salary was only $1.4 million, meaning a vast majority of his total compensation consisted of bonuses and stock awards.
Albert Bourla, CEO of Pfizer, also received a substantial increase in total compensation. Despite a 4% decrease in non-equity-based incentives between 2021 and 2022, Bourla’s total compensation increased by 36% with his base salary rising by 2.9%. Bourla also received $7.65 million in incentive awards, according to Pfizer’s Q4 2022 proxy statement.
Emma Walmsley, CEO of GSK, received a 3% raise for a total compensation of $10.17 million. GSK has had a tumultuous year with various successes including increased Shingrix vaccine sales and challenges such as potential upcoming Zantac lawsuits.
While Walmsley received a base salary of 1.26 million pounds and was awarded a bonus worth 250% of her salary, a majority of the bonus has been deferred, according to the company’s annual report.
At AbbVie, Rick Gonzalez enjoyed a 10% increase in total compensation from 2021 to $26.3 million in 2022.
There are a number of reasons why CEO pay is increasing. As inflation continues, the need to offer competitive pay to the average employee puts financial pressure on companies to increase CEO pay as well.
Secondly, U.S. government regulations are failing to control biotech profits. Without examining nuances behind internal pay structures, the government is falling behind, both in implementing cost controls and understanding how biotech companies operate.
During the pandemic, the government offered publicly funded research to companies without conditions due to the emergency. As such, it has often failed to influence public policy on matters such as equity and distribution, leaving pharmaceutical companies to create incentives such as patient access programs by themselves.
As a result, in the current market model, proper CEO leadership has become a function of risk versus reward that is often manifested in investment dollars. Given the risks of researching, developing and marketing pharmaceutical products, there is little chance the current CEO compensation trajectory will change any time soon.