NEW YORK, Oct 23
NEW YORK, Oct 23– Genomics executives receive 15 to 20 percent more cash compensation than their counterparts in non-genomics biotechnology firms, according to a study released Monday by PricewaterhouseCoopers’ Unifi Network.
The survey, which used annual shareholder proxy statements and 1999 financial reports to analyze compensation for the top 17 executive positions at 186 public biotechnology companies, found that genomics CEOs have an average base salary of $324,000 and a total cash compensation of $405,000.
Genomics CFOs, it found, have a base of $232,000 and a total cash compensation of $267,000.
On average, this was 15 to 20 percent higher than comparable salaries of non-genomics executives within the biotechnology industry, as was cash compensation for lower-level executives.
Of the 186 concerns in the study, the ones deemed genomics companies included: Affymetrix, Akila Biopharmaceuticals, Aurora Biosciences, Aviron, Axys pharmaceuticals, Cytogen, Genome Therapeutics, Human Genome Sciences, Incyte, Isis Pharmaceuticals, Millennium Pharmaceuticals, Myriad Genetics, Onyx Pharmaceuticals, PerkinElmer, Quintiles Transnational Corp., Sepracorp, and Xoma.
The study’s main criterion for choosing these players was whether the bulk of their work was based on genomics, said Deborah Bilak, the senior consultant on the study. But she admitted the selection was somewhat arbitrary.
“The problem is that so many companies are in genomics now it was hard to select which ones” to deem genomics companies, Bilak said.
“Almost every single company in the biotechnology industry says they are a genomics company.”
Within the biotechnology industry as a whole, the study also found that the overhang, or number of shares granted as a percentage of the shares outstanding in the stock options, is in the 17 percent range — a lower proportion than in other technology sectors.
“In the past, many biotech companies repriced their options to deal with underwater options,” Bilak said. “Since their stocks have appreciated in value, they have been able to slow down their usage of stock for senior executives.”
Additionally, the study indicated that executive employment agreements in the biotechnology industry offered CEOs one to two times their base salary and bonus in the event of change of control. This percentage is less than that of employment contracts in more mature industries, where executives are offered up to three times their pay in the event of a leadership change, Bilak said.
But employment agreements like this are new to the industry as a whole, and along with increased compensation packages, signal a maturation of the sector, she said.
" In an industry where critical mass and market capitalization are essential, increased industry consolidation is inevitable,” Bilak said. “Reflecting this trend, companies are beginning to offer more lucrative executive compensation packages to balance out the risks of a merger or acquisition."