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Thursday, May 23, 2024

Business: Executive Pay Rises Despite Pandemic

LIST: Amgen’s Bradway earned nearly $22 million in compensation in 2021.

Compensation for local public company executives mostly increased last year despite the economic shockwave created by the Covid-19 pandemic, which put several local companies on the backfoot in 2021.

Nearly 80% of chief executives and non-chief executives featured on the Business Journal’s Lists, as seen on pages 10-13, experienced an increase in compensation from 2020. 

Biotech was the most represented industry across both lists, with executives making up nine spots in total. Most executives in the Valley area’s burgeoning biotech industry experienced compensation increases. 

For example, Robert Bradway, chief executive of Thousand Oaks biotech giant Amgen, saw an 8% increase in compensation, making $21.7 million in company compensation last year. He is No. 1 on the list of chief executives.

Amgen reported in its most recent earnings report that its net income was down more than 10% year-over-year, totaling roughly $1.5 billion. However, the company’s stock has managed to stay consistent and is up more than 1% across the last year as of June 29.

Amgen executives made up many of the biotech spots on the Business Journal’s lists, with most experiencing raises in compensation.

Frank Watanabe

Other biotech executives, such as Arcutis Biotherapeutics Inc. Chief Executive Frank Watanabe, experienced a 56% increase in compensation in 2021 compared with 2020. 

Watanabe is No. 14 on the chief executive compensation list. Compensation increases, however, were not uniform at the company. Arcutis Chief Medical Officer Patrick Burnett experienced one of the higher decreases in compensation across the lists with a 52% decrease in compensation. 

Arcutis, which focuses on developing treatments for dermatological diseases, is closing in on the commercialization of its first product and the phase three trial of other treatments.

Other industries

A non-biotech company with multiple entries across the lists is Burbank-based Walt Disney Co., which took four spots in the non-chief executive list and the No. 4 spot on the chief executive list via Chief Executive Bob Chapek. 

Disney has put significant stock in strengthening its streaming businesses recently. The global media conglomerate reported that it added 7.9 million subscribers to its Disney+ streaming platform in its last quarter. That increase brought its total subscriptions across all of its direct-to-consumer offerings to more than 205 million, according to a statement from Chapek.

Disney’s stock has decreased more than 45% in the last year and as of late June, its stock traded at around $95 per share. Wall Street analysts have primarily given the stock a buy rating as it treads near the same lows it experienced at the start of the pandemic.

Despite the bumpy road, executive compensation at the company has not waned.

Chapek, who recently secured a three-year CEO contract, received a 28% increase in compensation last year bringing him to $18.1 million. Among his four colleagues on the non-chief executive list, Chief Financial Officer Christine McCarthy was ranked No. 1 with $21.7 million, the highest figure of all executives on both lists.

Semtech Corp. Chief Executive Mohan Maheswaran experienced the biggest decrease in compensation, posting a 94% decrease totaling $1.5 million. However, Maheswaran’s pay, like other local executives, is not reflective of the performance of his company.

Camarillo-based Semtech, which supplies semiconductors and algorithms, has posted positive earnings for the last four quarters. In all those quarters, the company managed to beat EPS and revenue expectations each time. Most recently the company reported $38 million in net income, a more than 61% increase year-over-year. 

Second to Maheswaran’s reduction in compensation is Gregory Bielli, the chief executive of Tejon Ranch Co., which like Semtech, reported positive earnings. The company’s revenue was reported to be up 90% year over year with a 500% increase in net income year over year.

If local executives are any indicator, rising executive compensation is not always in line with companies’ performances or the economic woes surrounding them. The same may be true on a larger scale.

A 2021 analysis of executive compensation conducted by Compensation Advisory Partners found that the median pay for chief executives increased by 19% throughout 50 companies with fiscal years ending between August and October 2021.

“Given strong company performance in 2021, we would anticipate seeing increases in CEO target pay for 2022, delivered largely through increases in the (long term incentives) value to align CEO pay with shareholder value creation,” the analysis said. 

A pay study from corporate data solutions company Equilar had a similar finding.

“Despite the pandemic and economic volatility, corporations have been continuing to advance CEO pay packages,” the study said. “The median pay for S&P 500 CEOs was $14.5 million in 2021— a 17.1% increase from the previous year.”

Antonio Pequeño IV
Antonio Pequeño IV
Antonio “Tony” Pequeño IV is a reporter covering health care, finance and law for the San Fernando Valley Business Journal. He specializes in reporting on some of the biggest names in the Valley’s biotechnology sector. In addition to his work with the Business Journal, Tony has reported with BuzzFeed News on the unsupervised use of Clearview AI, a controversial facial recognition technology. Tony, who also conducts freelance reporting, graduated from the USC’s Master of Science in Journalism program in 2021. He is in his fifth year as a journalist as of 2021.

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