As a result of the collapse of the financial markets and the challenges that has placed on their companies, total compensation for the chief executives at four of the five top mass-spec vendors — including salaries, stock options, bonuses, and other compensation — shrank last year, according to proxy statements filed recently with the US Securities and Exchange Commission.
The reductions in reported total compensation ran from the negligible — Waters CEO Douglas Berthiaume took a hit of less than 1 percent — to the whopping, with William Sullivan, the CEO of Agilent Technologies, seeing a 39 percent drop in his total compensation.
Meanwhile, one chief executive's reported total compensation for 2008, Frank Laukien, CEO of Bruker, spiked 80 percent.
To be sure, the executives weren't exactly reduced to food stamps in 2008: in all instances, their take-home pay increased as salaries rose, and total compensation decreases came from cuts in things such as option awards, stock options, and bonuses.
The reductions also come against a backdrop of layoffs, mandatory unpaid time-off, and cuts in pay to employees at the companies.
The trend, however, reflects how thoroughly the broader economy has impacted the mass-spec, and more generally the life science, industry and perhaps how these companies expect the effects to pervade in 2009.
For example, even while his reported compensation package saw a healthy uptick last year, for 2009 Laukien volunteered to cut his salary by 25 percent as part of Bruker's cost cuts. Sullivan's salary is being sliced by 10 percent also. And Berthiaume's salary will remain flat this year, "due to economic conditions at the end of fiscal 2008 and the projections for company performance in 2009," Waters said in its proxy.
However, Life Technologies CEO Greg Lucier and Thermo Fisher Scientific CEO Marijn Dekkers will see their salaries bump up in 2009.
Harry Glorikian, managing partner at life-science consulting firm Scientia Advisors, said that given the current economic climate and populist grumbling about executive compensation in general, all companies — life science and otherwise — are especially sensitive to the matter.
"Most of the companies are taking a more conservative view of this sort of stuff," he said. "No comp committee is going to go crazy with [executive compensation] right now."
Most salaries, he added, will be frozen in 2009 at 2008 levels. Cash incentives for 2009 also appear to be down, "but that's because '08 [revenue] levels were down," especially in the fourth quarter.
Firms are also struggling with how to handle long-term incentives. With the market down, granting the same number of shares to executives in 2009 as in 2008 amounts to a cut in compensation since in most cases the value of those shares has plummeted in the past year.
"If you give out the same [dollar amount in shares] now you've got to go back to the shareholder potentially and say, 'We need more stock,' and nobody wants to go down that road," Glorikian said. "I think for the most part, it's one of those things where it's just 'Deal with it.'"
But while compensation for most of the CEOs in the mass-spec space shrank in 2008, in many cases, reported compensation for officials directly beneath them rose.
At Life Technologies, Chief Financial Officer David Hoffmeister's total compensation package increased by 10 percent in 2008 while Bruker CFO and Treasurer William Knight saw his compensation spike almost 19 percent.
And at Thermo Fisher Scientific, Marc Casper, executive vice president and chief operating officer, received a 35 percent bump in total compensation last year.
The amounts reported in company proxies, however, do not necessarily correspond with what an individual actually took home last year. The dollar amounts recorded by companies for stock awards and option awards are the accounting expenses incurred by the firms. The actual amounts made by an executive under these compensation forms might be substantially different from the reported figures, depending on if and when options are exercised and the market price at the time they are exercised.
Indeed, the Associated Press recently reported that Dekkers earned nearly $19 million last year, more than double his total compensation reported on the company's proxy. The AP figure includes stock awards and option awards that totaled $15.5 million when they were granted to Dekkers.
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A spokesman for Thermo Fisher told ProteoMonitor that he does not know how AP calculates its figures, "but agrees that it causes confusion."
AP also reported that Agilent's Sullivan earned $5 million in 2008 — $4 million short of the amount reported on its proxy — which includes restricted stock and option awards that totaled $2.7 million on the days they were granted.
A spokesman for Agilent, however, stood by the $9.2 million it reported for Sullivan in its proxy.
Below is a summary of executive compensation for the five leading mass spec firms in 2008 and how they compare to 2007, as reported in their proxies.
CEO Lucier's total compensation shrank 13 percent in 2008 to $9.6 million, compared to $11.1 million in 2007. The brunt of the decrease came from a reduction in option awards to about $1.6 million in 2008 from more than $3 million in 2007. His salary for last year increased to $978,404 from $910,000 the year before. Stock awards totaled $4.9 million and non-equity incentive plan compensation was $2.05 million.
Lucier's salary for 2009 will increase 10 percent to $1.075 million.
Mark Stevenson, president and COO of the firm, received total compensation of more than $7.7 million in 2008, which included a base salary of $75,000, a bonus of more than $6.7 million, and non-equity incentive plan compensation of $709,122. His base salary consisted of payments for the last five weeks of 2008 that ABI was part of Life Tech. Stevenson had been president and COO of ABI before it merged with Invitrogen creating Life Tech.
A comparison to his 2007 compensation was not available.
CFO Hoffmeister was paid nearly $3.5 million in total compensation last year, up from almost $3.2 million in 2007. His base salary was $475,192, compared to $440,000 in 2007. Option awards nearly doubled to almost $2 million last year.
For full-year 2008, the firm reported revenues of $1.62 billion on a pro forma basis— which included $191 million from ABI in the last five weeks of the year as a result of the merger with Invitrogen — compared to revenues of $1.28 billion for Invitrogen in 2007.
The firm posted a profit of $31.3 million for the year, compared to a profit of $143.2 million for Invitrogen in 2007.
Thermo Fisher Scientific
Thermo Fisher CEO Dekkers took an 8 percent hit in 2008 as his total compensation slid to $9.6 million from $10.5 million in 2007. His salary for 2008 inched up to $1.16 million from $1.13 million in 2007, but stock awards were more than halved to $540,433 last year from $1.39 million in 2007.
Starting April 1, his salary increased 4.5 percent to $1.218 million.
Senior Vice President and CFO Peter Wilver received $2.09 million in total compensation last year, up from $1.85 million the year earlier. His salary rose to $566,250 from $535,000 in 2007, while stock awards inched up to $575,744 from $358,946.
CFO Casper's total compensation for 2008 was $3.83 million, up from $2.84 million in 2007. In addition to an increase in his salary, to $701,250 in 2008, compared to $657,498 in 2007, his option awards rose to $1.47 million last year from $680,130 in 2007.
The company had revenues of $10.5 billion last year, up 8 percent from $9.7 billion the year before. Profit rose almost 31 percent to $994.2 million, versus $761.1 million in 2007.
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Of the major mass-spec manufacturers, Agilent's CEO took the biggest hit to compensation. In 2008 Sullivan received $9.2 million in reported compensation, down from $15 million in 2007.
Stock awards were slashed in 2008 to $3.7 million from $10.3 million in 2007. He also saw smaller cuts in his pension value, nonqualified deferred compensation earnings, and other forms of compensation, though his salary rose to $986,667 last year, compared to $946,874 in 2007.
For 2009, he and all top executives at the company are taking a 10 percent salary cut.
Adrian Dillon, executive vice president of finance and administration and CFO, also took a major hit as total compensation receded 43 percent to $4 million last year, compared to $7.1 million in 2007. His salary remained at $699,996, unchanged from 2007, but his stock awards dropped to $1.6 million from $4.2 million in 2007 and no bonus was give to Dillon last year. In 2007 his bonus was $525,100.
Ronald Nersesian, vice president and general manager of the wireless business unit, received $1.5 million in compensation, including $397,875 in salary. Nersesian was not an executive officer in 2007 and his compensation information for that year was not available.
Revenues for the company's fiscal 2008, which ended Oct. 31, 2008, rose 7 percent to $5.8 billion from $5.4 billion in FY 2007. Net income climbed to $693 million, up 9 percent from FY 2007 profits of $638 million.
Despite an increase in his salary to $735,000 in 2008 from $700,000 the year before, Waters CEO Berthiaume's total compensation contracted .77 percent to $3.78 million. In 2007 his compensation totaled $3.81 million.
According to the Waters' proxy, the biggest hit to Berthiaume was in pension value and nonqualified deferred compensation earnings: In 2008 that amounted to $105,232, compared to $264,092 in 2007.
The salary for Berthiaume and Waters' other executive officers will remain at 2008 levels this year.
Arthur Caputo, executive vice president and president of the Waters division, saw his total compensation increase more than 15 percent to $3.66 million from $3.17 million in 2007. His salary rose to $450,000 from $410,000.
Compensation for John Ornell, vice president of finance and administration and chief financial officer, increased more than 10 percent to $1.84 million last year from $1.67 million the year before. That included a salary increase to $360,000 from $338,000 in 2007.
The company saw revenues rise 7 percent last year to $1.58 billion from $1.47 billion in 2007 while profits increased 20.3 percent to $322.5 million from 268.1 million the year before.
In 2008 Bruker CEO Laukien pulled in $1.1 million in total compensation, an 80 percent hike from the $599,150 he received in 2007. His salary last year increased to $425,000 from $306,500. He also received a bonus of $404,239 in 2008, compared to $200,000 the year before, and his option awards rose to $224,925 from $59,300 in 2007.
However, for 2009, Laukien has agreed to a salary of $318,750, down 25 percent from his 2008 figure.
CFO and Treasurer Knight's compensation climbed to $613,482 last year from $516,830 the year before. His salary rose to $320,000 from $260,000 while his option awards nearly doubled to $189,325 from $98,400.
He also has agreed to a salary reduction, in his case 10 percent, as part of Bruker's cost-cutting measures. In 2009, that will amount to $288,000
Dirk Laukien, senior vice president at Bruker and president of Bruker Optics, saw his total compensation shrink 18 percent to $765,697, from the $936,600 in 2007. While his salary rose to $300,000 from $260,000 in 2007, his bonus was cut by more than half to $81,897 in 2008 from $190,000 the year before, while stock awards fell to $370,300 from $476,100.
His salary for 2009 stays at $300,000.
In 2008, Bruker posted receipts of $1.11 billion, up 7 percent from $1.03 billion in 2007, while profits dropped 78 percent to $31.3 million from $143.2 million the year before.