Bristol-Myers Squibb’s incoming CEO will get quite a raise with his new job. But it’s likely to be awhile till Giovanni Caforio, now the company’s chief operating officer, sees his pay catch up to that of current chief Lamberto Andreotti.
When Caforio takes over May 5, his pay package will be worth more than $8.7 million, provided he and the company hit their bonus targets. But if he wows the board and investors, he could collect several million more than that.
Caforio’s base salary will stand at $1.4 million, with a bonus target at 150% of that, or $2.1 million. But according to the company’s latest proxy statement, payouts can range higher based on individual performance. For instance, last year Andreotti collected a bonus of $3.8 million, significantly more than his target of about $2.5 million. Bristol-Myers can pay out bonuses of as much as 251% of the target amount, if the company and execs beat their goals by a big enough margin.
Then there’s long-term incentive pay, which is divided 60-40 between shares pegged to internal performance goals and shares pegged to the market. According to an SEC filing, Caforio’s long-term payout was set at $5.235 million. But again, the company’s incentive plan specifies that long-term awards can range as high as 150% of that amount. For Caforio, that would be $7.852 million.
So, the new chief is set to collect $8.735 million, all told. But if all goes well, he could rack up $11.35 million or more. That’s a big raise for Caforio: In 2013, as EVP, he collected $3.3 million in total compensation.
Caforio will take the reins at an auspicious time for Bristol-Myers. Its new cancer immunotherapy, Opdivo, hit the market in December–and last week, it won FDA approval for a brand-new use in lung cancer. Analysts are looking for $600 million or more from the drug this year.
Optimism about Opdivo has helped offset disappointment in hepatitis C, a field where Bristol-Myers had been expected to lead. Its treatment Daklinza (daclatasvir), approved in Japan, lost its breakthrough designation from the FDA earlier this year, because of rivals that beat it to the U.S. market. And that came after BMS decided to pull its app for Daklinza approval alongside a companion med, Sunvepra (asunaprevir). So, Caforio’s early tenure won’t be without its challenges.
Meanwhile, Andreotti will continue collecting a paycheck as Bristol-Myers’ chairman. He’ll stay on as executive chairman till August, with his usual annual pay and bonus intact. He won’t be eligible for additional long-term incentive pay, though.
And on Aug. 3, Andreotti will step out of the day-to-day to become non-executive chairman, with a $200,000 annual retainer, paid half in cash and half in stock. At first, he’ll collect a transitional retainer of $225,000, for working closely with Caforio. And he’ll get the usual compensation paid to BMS’ non-executive board members, which amounts to $90,000 per year in cash and $160,000 in shares.
That’s quite a comedown for Andreotti, who consistently ranks among the highest-paid executives in biopharma. For 2013, the most recent figures available, Andreotti’s pay package came in third in the industry. His compensation amounted to $20.85 million, with $14.59 million of that in stock-based incentive awards.
By Tracy Staton