Advisory groups questioned whether the upfront payouts were in the best interests of shareholders
Last modified on Thu 10 Jun 2021 14.10 EDT
The US drugmaker Regeneron, whose Covid treatment was hailed as a “cure” by Donald Trump last year, has come under fire from two influential shareholder advisory groups over “excessive” payouts made to its top executives ahead of its annual meeting on Friday.
The investor advisory group Glass Lewis said it was “highly concerned” at the New York-based firm’s decision last year to ditch annual stock options. Instead it will replace them with an upfront five-year grant of performance-restricted stock units worth $130m (£92m) for each of its top two executives – Leonard Schleifer, the Regeneron chief executive, and George Yancopoulos, the chief scientific officer.
While they are intended to lock down executives for the next few years, Glass Lewis questioned whether the upfront payouts were in the best interests of shareholders. It estimates that the annualised value of the grants is 51% higher than the previous year’s stock options.
Institutional Shareholder Services, another advisory group, also expressed concern: “The awards are excessive in value, replace annual grants for a relatively long period of time, and provide multiple opportunities for the same shares to be earned.”
Glass Lewis noted that the company’s executive payouts had met with “substantial opposition from shareholders” in recent years. Together, the two top bosses collected $270m in pay and bonuses last year. Schleifer was the best-paid CEO in the global pharmaceutical industry last year with his $135m package.
At last year’s advisory vote on executive pay, which is held every three years, Regeneron’s plans received support from 70.1% of votes cast. At the time of the meeting, Schleifer owned 16.6% of the company while the French drugmaker Sanofi had a 20.6% holding, which it has since sold. When these stakes are excluded, less than 33% of votes were cast in favour of the company’s pay plans.
Regeneron is supplying the US government with millions of doses of its Covid antibody cocktail REGEN-COV, after receiving emergency authorisation for the treatment in November. It is a combination of two monoclonal antibodies designed to prevent the coronavirus spike protein attaching to receptors in the body, to prevent Sars-CoV-2 infection and to treat people who have contracted the virus.
The share price of the Nasdaq- and London-listed company soared in early October 2020, from $564 to over $600 a share, after then-president Trump touted the treatment in a video, claiming that it had cured his Covid. The shares have risen 41% since the start of 2020.
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