LOS ANGELES (AP) — Amgen Inc. Chairman and CEO Kevin W. Sharer received compensation valued at about $21 million in 2010, a 38 percent increase from what he got the year before, according to an Associated Press review of the biotechnology company's proxy statement.
The Thousand Oaks company said management delivered on several operational performance targets, including revenue and adjusted earnings per share growth. That helped boost the size of Sharer's annual cash incentive award.
However, the company's annual total shareholder return amounted to 3.7 percent, less than Amgen's goal of 8 percent, resulting in below-target performance unit payouts.
Sharer was awarded a base salary of about $1.8 million, up about 4 percent from the previous year, according to documents filed with the Securities and Exchange Commission on Thursday.
But the majority of the executive's pay package came thanks to a hefty boost in stock and option awards valued at about $15 million combined.
Sharer received stock awards valued at $8.3 million at the time they were granted, up 88 percent from a year earlier, and option awards valued at about $6.7 million on the day they were granted, up 43 percent from the year before.
The executive's performance-based cash bonus fell 4 percent to $3.6 million.
Sharer also received perks valued at $756,895, down 4 percent from what he received in 2009.
The perks package was comprised of $528,538 in company credits to a supplemental retirement plan; $126,478 for personal use of company aircraft; $43,740 for personal use of company car and driver; $17,939 for expenses related to guests accompanying Sharer on business travel; $15,000 for personal financial planning; $24,500 in contributions to 401(k) retirement and savings plan; and, $700 for other costs, including physical examinations and personal expenses while on business travel.
Sharer did not receive a bonus for 2010, or in the prior two years.
His total compensation in 2009 was about $15.3 million.
The AP formula calculates an executive's total compensation during the last fiscal year by adding salary, bonuses, perks, above-market interest the company pays on deferred compensation and the estimated value of stock and stock options awarded during the year.
The AP formula does not count changes in the present value of pension benefits. That makes the AP total slightly different in most cases from the total reported by companies to the Securities and Exchange Commission.
The value that a company assigned to an executive's stock and option awards for 2010 was the present value of what the company expected the awards to be worth to the executive over time.
Companies use one of several formulas to calculate that value. However, the number is just an estimate, and what an executive ultimately receives will depend on the performance of the company's stock in the years after the awards are granted. Most stock compensation programs require an executive to wait a specified amount of time to receive shares or exercise options.
Amgen has been trying to recover from several years of lackluster sales of its key revenue drivers, the anemia drugs Aranesp and Epogen. Sales have been down over the last two years because of safety issues and stricter warnings.
The company's other key revenue drivers include Neulasta and Neupogen, which help prevent infections in chemotherapy patients.
In January, the drug maker bolstered its late-stage drug pipeline by buying privately held cancer drug maker BioVex Group Inc. The company's drug candidate OncoVex is a virus that attacks cancer cells, destroying tumors and stimulating the immune systems to fight cancer throughout the body.
For 2010, Amgen's net income edged up less than 1 percent to $4.63 billion, or $4.79 a share, from $4.61 billion, or $4.51 a share. Revenue for the year improved 3 percent to $15.05 billion from $14.64 billion.
Amgen's stock price fell by about 3 percent in 2010, dropping to $54.90 at the end of the year from $56.57 at the close of 2009.