Teva CEO Kåre Schultz sees a 35% raise despite the company's continued legal woes
Amid a year where revenues were mostly flat but lawsuits continued piling up, Teva CEO Kåre Schultz saw himself getting a raise.
In shareholder documents filed to the SEC on Wednesday, Teva revealed its executive compensation packages for 2020. Though his salary remained the same as each of the last two years, Schultz’s stock awards increased by about $4 million from 2019, accounting for almost all of the additional pay he received in his $15.7 million package.
The new awards helped boost Schultz’s pay by nearly 36% year over year, when he received $11.6 million in 2019. His 2020 package is still a far cry from his first year steering Teva in 2018, however, when a $20 million bonus helped him earn $32.5 million as the year’s highest-earning pharma exec.
The main factor at play in Schultz taking home another $4 million in stock options occurred during a meeting where, according to the Teva documents, shareholders approved several changes to the CEO’s employment terms. Highlighting Schultz’s execution of a two-year restructuring plan that cut costs by $3 billion, the company added another year onto his contract and tacked on the additional stock awards to bring it closer to Teva competitors.
Schultz’s options, increased from $6 million to $10 million, would continue to be tied to performance metrics set out before each year. Teva noted that Schultz earned all $10 million of the equity award this year, and he also pulled in all $6 million of the award in 2019.
Shareholders also agreed to revise his retirement plan to allow for continued vesting of outstanding equity grants, contingent on various non-compete and confidentiality clauses.
The full breakdown of Schultz’s pay package: He received a total of $15,724,518, starting with his $2 million base salary. His stock awards came in one dinner entree (or a Cambridge, MA parking ticket) short of $10 million, at $9,999,970. Finally, Schultz received $3,055,920 in non-equity incentive compensation and $668,628 in “other” compensation, which included nearly $90,000 for a company car and reimbursement of related automobile expenses.
Though Schultz has pulled Teva out of its debt-ridden decline of the mid-2010s, the generic drugmaker continues to be involved in lawsuits spanning allegations of illicit opioid marketing, price-fixing and a kickback scheme that defrauded Medicare. The Israeli company was hit with three lawsuits this past August on these topics, coming from New York, federal prosecutors and the DoJ.
2020 also marked a flat year for revenues, with the total down a slight 1% from the previous year. Teva noted that the main reason for the decline was a decrease in Copaxone sales and certain respiratory products, though it was offset by higher revenues from Austedo and Ajovy.