Vertex chief’s compensation totaled $36.6 million last year
Total included a retention bonus
The chief executive of Vertex Pharmaceuticals Inc. — a prominent Boston biotech company that has posted only one annual profit in its 26 years — earned total compensation of $36.6 million last year, including a one-time retention award valued at $14.9 million.
Jeffrey M. Leiden, who assumed the top job at Vertex in late 2011, received a salary and cash bonus of about $4.1 million last year. He also received stock awards valued at about $17.6 million. The details of Leiden's compensation were in a regulatory filing Friday.
The retention bonus won't vest for three years and will be paid only if Vertex, which is working to bring a portfolio of cystic fibrosis drugs to market, is profitable for a full year during that period. Last year's stock awards to Leiden will vest over four years.
Leiden's total payout was up 179.3 percent from his $13.1 million in 2013.
Vertex spokesman Zach Barber said the company's shares have increased 250 percent since Leiden joined the company, placing it in the ranks of the top 15 best performing companies on the Standard & Poor's 500 for the past three years. He said that more than 95 percent of Leiden's compensation last year was based on company performance.
"Since Jeff joined Vertex in late 2011, the company has performed exceptionally well, providing transformative medicines to people with cystic fibrosis worldwide and creating significant value for shareholders," Barber said.
It is not unusual for biotech companies to wait years to turn a profit while their drugs are in development and clinical testing, said Frank B. Glassner, chief executive of Veritas Executive Compensation Consultants LLC, a national advisory firm.
Vertex reported a profit in 2011 on the strength of an earlier drug that treated the hepatitis C virus, but stopped selling that treatment after a more popular competing medicine arrived on the market.
"It looks like their executive pay is aligned with return to shareholders," Glassner said of Vertex.
"In the biopharma industry, companies can be pre-profit, and pre-revenue for that matter, for many years before a drug is on the market. This is pay for performance" based on how investors view the potential of the company's experimental therapies.
Barber said Vertex paid out retention bonuses to senior executives for the first time last year.
Others receiving the bonus last year, according to the regulatory filing, were Ian F. Smith, executive vice president and chief financial officer; Stuart A. Arbuckle, executive vice president and chief commercial officer; Jeffrey Chodakewitz, executive vice president and chief medical officer; and Kenneth L. Horton, former executive vice president and chief legal officer.
Those awards totaled more than $29 million.
"This was done to assure the continued stability and leadership at the company," Barber said.