This story originally ran on April 20.
By Tony Fong
Total compensation for most chief executives at the top mass-spectrometer vendors dropped sharply in 2009, reflecting a downturn in their companies' business and continuing a trend begun in 2008, according to proxy statements filed by the firms with the US Securities and Exchange Commission.
Among the top five mass-spec companies from last year — Life Technologies, Agilent Technologies, Bruker, Thermo Fisher Scientific, and Waters — the only CEO whose compensation increased was Thermo Fisher's Marc Casper (see table below).
And that was only because he was promoted in the fall from his prior position as chief operating officer, replacing Marijn Dekkers. Last year, his compensation package totaled more than $34 million, more than three-and-a-half times his compensation of $9.3 million in 2008. Dekkers made $9.6 million in total compensation in 2008.
The CEOs of the other four companies, however, saw a sharp drop in compensation in 2009. Agilent CEO William Sullivan saw his compensation shrink 17 percent to a little less than $7.6 million. Bruker President and CEO Frank Laukien's compensation dropped 51 percent to $809,748, and his counterpart at Waters, Douglas Berthiaume, saw a 59-percent drop in compensation to slightly more than $1 million.
Meanwhile, total compensation for Greg Lucier, CEO of Life Tech, fell 60 percent to $4.5 million in 2009.
Life Technologies is no longer in the mass spec space, however, after completing this past January the sale of its half of a mass spec joint venture with MDS to Danaher. The mass spec business is now in a newly formed company, AB Sciex (PM 02/05/10).
Total compensation includes a broad range of categories, and though companies include different criteria, generally it comprises base salary, bonuses, stock and option awards, and non-equity incentive-plan compensation.
The amounts reported in company proxies, however, do not necessarily match how much a CEO takes home. The dollar amounts in stock awards and option awards that are reported by firms in their proxies are the accounting expenses incurred by the firms. As such, executives' actual compensation may vary substantially from what is reported in a proxy, depending on if and when options are exercised and what the market prices are at the time they are exercised.
Falling Revs, Sliding Pay
The decline in CEO compensation followed a more general trend. According to an analysis of 292 companies in the S&P 500 by the trade union giant AFL-CIO, the average total compensation for a company CEO fell 9 percent in 2009 to $9.2 million.
The dip in mass-spec company CEO compensation reflected the downturn in their companies' business, as well. During 2009, four of the top five mass-spec vendors reported either flat or reduced revenues.
Bruker reported flat revenue in 2009 year over year, Agilent's 2009 revenues declined 22 percent to $4.5 billion, while Thermo Fisher's revenue slid 4 percent to $10.1 billion, and Waters' revenue receded 5 percent to $1.5 billion.
Meantime, Life Tech's receipts spiked 115 percent on a pro forma basis. The merger of Invitrogen and Applied Biosystems that created Life Tech was completed Nov. 21, 2008. As a result, Life Tech's revenue for 2008 included results from ABI operations for only the last five weeks of that year.
To cope with the challenges of an uncertain economy, the companies implemented numerous cost-saving maneuvers, including salary freezes, layoffs, and facility closures.
During a conference call to discuss his firm's fourth-quarter earnings in the fall, Agilent's Sullivan called 2009 "an extraordinarily difficult year" for the company.
Last year, his base salary fell 8 percent to $907,500 from $986,667 in 2008 as a result of a voluntary 10-percent cut in his salary from January 2009 through October 2009, when Agilent's fiscal year ended.
Other Agilent top executives also took a 10 percent pay cut during the year.
Sullivan's stock awards also fell in 2009, to $2.7 million from $3.7 million in 2008, and incentive awards based on certain performance criteria fell to $949,618 in 2009 from $1.3 million in 2008.
An Agilent spokesman declined to disclose Sullivan's pay for 2010.
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Like Sullivan, Bruker's Laukien took a voluntary pay cut — 25 percent — last year in the face of a difficult economy. His base salary for 2009 was $318,750, compared to $425,000 in 2008. For 2010, though, his base salary has been restored to $425,000, according to the company's proxy.
Other top-level Bruker executives also took voluntary pay cuts in 2009 to keep down costs.
Two CEOs received a bump in base salaries in 2009, though that was more the result of a promotion in one instance and an expansion of responsibilities in another. After promoting Casper to CEO in September, Thermo Fisher's board raised his salary to $930,000 for the entire year from the $739,000 he had been making as COO.
By comparison, Dekkers, the firm's former CEO, was given a $1.2 million salary for 2009.
Combining Casper's salary as COO and CEO, his base salary was $790,220 in 2009, compared to $701,250 the year before. For 2010, his base salary is $1 million.
Meanwhile, 2009 was the first complete year for Lucier as head of Life Tech. He had been CEO of Invitrogen before it merged with ABI. His base salary in 2009 was a little more than $1.1 million, up from $978,404 in 2008. The company has not disclosed 2010 compensation for its executives.
Lucier, however, received neither stock nor option awards in 2009, which contributed to the sharp drop-off in his total compensation for the year. In 2008, those two forms of compensation netted him more than $8.1 million.
He did, however, receive a non-equity incentive payout of $3.3 million in 2009, up from $2.1 million the year before.
The base salary for Waters' Berthiaume in 2009 was $735,000, the same as in 2008, as Waters froze the salaries of its executives for the year. The reduction in his total compensation came from incentive awards based on certain performance criteria: In 2009 no such award was given to any Waters executive. In 2008 Berthiaume received a payout of almost $1.5 million in such compensation.
A company spokesman said he did not know Berthiaume's 2010 salary, but according to the company's proxy, executive officers received a pay increase of either 3 percent or 5 percent for the year.
Follow the Leader
The decline in executive compensation trickled down to other executive levels at the five companies. In 2008, total compensation for officials directly below the CEO rose in many cases (PM 04/16/09). In 2009, these executives at all of the companies except Thermo Fisher saw their total compensation fall.
Thermo Fisher Chief Financial Officer Peter Wilver's total compensation swelled to $3 million in 2009 compared to $2.4 million in 2008 and included a bump in his salary to $595,758 from $566,250 in 2008.
And Alan Malus, senior vice president at Thermo Fisher, saw his salary climb to $544,078 in 2009 from $520,000 in 2008 as part of his $3.3 million total compensation package for 2009, which grew from $3 million in 2008.
At Thermo's competitors, though, the picture was very different. Life Tech President and COO Mark Stevenson's total compensation receded 74 percent to $2.5 million from $9.8 million, while David Hoffmeister, the company's CFO, saw his total compensation decline 61 percent to $1.4 million from $3.7 million in 2008
At Agilent, compensation for CFO Adrian Dillon, who recently left the company, declined to $3.7 million from $4 million in 2008, while D. Craig Nordlund, who retired from Agilent at the end of the company's fiscal 2009, made nearly $2.9 million last year, up from $1.7 million in 2008. His increase was mostly as a result of a severance payout of more than $1.5 million.
At Waters, in addition to having their salaries frozen in 2009, executives did not receive non-equity incentive-plan compensation. As a result, Waters division President Arthur Caputo's compensation slid to $2.6 million in 2009 from $3.7 million in 2008, and CFO John Ornell made $1.5 million last year, about $340,000 less than in 2008.
And though Bruker froze its salaries in 2009, executives received a bump in their bonuses, with the exception of Dirk Laukien, who had been the president of Bruker Optics until November 2009. His bonus for 2009 had not been determined at the time of Bruker's filing of its proxy.
Bruker COO William Knight received a $132,349 bonus last year, compared to $92,397 in 2008, but his total compensation still shrank, to $780,376 from $827,647.
Brian Monahan, who was promoted to vice president of finance and chief accounting officer in early 2009, received a $168,818 bonus in 2009, up from $44,099 in 2008. In addition, his option awards increased to $688,000 from $122,250 year over year, leading to total compensation of $1.1 million last year, compared to $373,399 in 2008.
Monahan became Bruker's CFO on Feb. 1.