Last summer, when ex-Allergan president Doug Ingram was recruited for the top job at Sarepta $SRPT, the board set some big goals for the new CEO. And they put up some extraordinarily big rewards if he achieves them.
Ingram’s total compensation package for the second half stretch when he was at the helm is worth $56,866,241 — far outstripping any other pay deal outlined in biopharma for 2017. There’s about $11 million in stock awards. The lion’s share — $44 million — is in stock options. If he achieves his mission in building the company, and his stock vests, he would end up with as much as 6.6% of the company. Falling short, though, would push that down to as little as nothing.
But it won’t be easy. From the proxy:
In order for the performance-based option award to fully vest, our stock would need to increase by at least 438% in the 5-year period following the grant date (from $34.65 to approximately $186.5 per share), and the Company’s share price CAGR would need to exceed the CAGR of the NASDAQ Biotech Index by at least 5% in the same period. Importantly, the use of the Biotech Index ensures that Mr. Ingram cannot benefit from stock appreciation resulting merely from market factors, but in fact must beat the performance of other companies in the sector. These high thresholds are designed to incentivize our new Chief Executive Officer to focus on the Company’s growth and how it can outperform its peers over a 5-year period.
Underscoring the challenges he faces, Sarepta shares slumped on Thursday as the company managed to disappoint analysts on its sales revenue for the Duchenne MD drug eteplirsen, as well as word that European regulators are lining up a rejection for the drug that will mark a considerable setback for the biotech.
Sarepta, though, has managed to succeed in the face of extraordinary odds. Just getting an approval at the FDA required a dog fight among agency regulators, which Janet Woodcock emerged triumphant in pushing through an OK despite a thin and questionable application package that would have doomed virtually any other pitch.
Ed Kaye, who was at the helm at Sarepta when the FDA Hail Mary landed, had a compensation package worth $3.4 million in 2016. And the board’s generosity in pumping up Ingram’s deal didn’t extend to any of the other top execs at the company.
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