Rising compensation for biotech R&D officers

As the biotech industry has hit profitability in recent years, with record market values and a steady drumbeat of regulatory approvals for its products, compensation for its executives has in turn climbed steadily. Whereas the global financial downturn produced a road bump that sidetracked many companies—and wrecked others—recent signs show a sector that has navigated its way back onto the highway and is picking up speed.

The 2013 BioWorld Executive Compensation Report¹ tracks the annual compensation for biopharmaceutical executives at 258 companies (including 55 non-US companies) based on filings submitted to the US Securities and Exchange Commission. Here we focus on R&D officers, which includes such positions as chief medical officer, chief scientific officer, chief development officer, research executives, R&D executives, development executives and clinical development executives. Table 1 ranks the top 20 earners, all from US companies, who earned anywhere from $662,000 to $2.55 million in the 2011 fiscal year. We note that the scientists ranked number 1, 6 and 14 have in the past published original research in Nature Biotechnology.

Table 1 Biotech R&D officers by annual compensation

Figure 1 breaks down the median direct compensation package for this group. We see that in addition to salary and bonus, long-term incentives such as stock, stock options and long-term cash awards can double total compensation for R&D officers. Figure 2 shows the total compensation for R&D officers at all companies, broken down into total cash compensation (base salary, bonuses, commissions, cash profit-sharing and other forms of variable cash payments), total direct compensation (total cash compensation and total fair value of all long-term incentives) and total realized direct compensation (total direct compensation and total long-term incentive value realized).

Figure 1: Biotech R&D officers' median annual direct compensation package.

Long-term incentives include but are not limited to stock option awards, restricted stock shares/units, performance stock shares/units, phantom stock shares, stock appreciation rights and long-term cash awards.

Figure 2

Biotech R&D officers total compensation for all companies by type, measured by percentiles.