Share Wars
Executive Summary
The news that William Haseltine, PhD, the chairman and CEO of Human Genome Sciences Inc. has sold 15% of his holdings in the company for some $65 million-leaving him $300 million in HGS stock-prompted us to take a look at just how well top-tier biotech CEOs have done. Dr. Haseltine's success describes a new biotech fact: for the most part, top-tier biotech CEOs are worth--at the moment--more than Big Pharma CEOs.
The news that William Haseltine, PhD, the chairman and CEO of Human Genome Sciences Inc. has sold 15% of his holdings in the company for some $65 million—leaving him $300 million in HGS stock—prompted us to take a look at just how well top-tier biotech CEOs have done.
To arrive at our answers, we sorted through the most recent proxy statements of the most highly valued biotechs and some of the top publicly traded big pharmaceutical companies, to estimate and compare the current value of the various CEOs holdings. We've excluded unexercised options. Some of the holdings have actually fallen in value, though as often because CEOs have sold some stock as because the share values have plummeted.
Still, they're all doing pretty well, even if no one has matched the value of Dr. Haseltine's holdings. But Dr. Haseltine describes a new biotech fact: for the most part, top-tier biotech CEOs are worth—at the moment—more than Big Pharma CEOs. Despite the fall-off in biotech valuations, the value of top-tier biotech stocks is still far above where they were in early 1999, whereas Big Pharma stocks haven't budged much at all in the same timeframe. One could argue, of course, that the biotech valuations are far more delicate than the Big Pharmas and that pegging the value of CEO stock holdings is pretty risky business. But given the roller coaster Eli Lilly & Co. (on the down-and-then-upside) or Schering-Plough Corp. (all on the downside) has been on, one can't exactly say that drug stocks are models of stability.
As with all things biotech, corporate earnings aren't necessarily a help. The most profitable biotech, Amgen Inc. , is at the bottom of the CEO list (in part because Kevin Sharer is relatively new to the company), while three of the top five biotech CEOs are losing lots of money. And if there were a corporate profit-to-CEO shareholdings ratio, Big Pharma CEOs would have fallen off the bottom of the chart.
One last point: the fact that many of the biotech CEOs got stock early in their companies' lives, sometimes founders stock, translating to millions of shares, versus hundreds of thousands of shares held by pharma CEOs—has contributed to their enrichment. Indeed, Ralph Larsen, the chairman and CEO of Johnson & Johnson , who has been with the company since 1962, holds stock valued at a mere $98 million, while Idec Pharmaceuticals Corp. 's William Rastetter, who got a chunk of founder's stock in 1986, has holdings worth $154 million.