Top 10 Highest-Paid Healthcare CEOs in 2022 Include Five from Pharma Sector

Recently, the U.S. health and healthcare media outlet STAT conducted a statistical and multi-dimensional analysis of CEO compensation at more than 300 publicly listed healthcare companies in the United States.The total compensation of these CEOs reached $4 billion in 2022, an 11% decrease from the $4.5 billion recorded in 2021.Capital market turbulence and declining company stock prices have led to reductions in CEO compensation across multiple dimensions.

Among these CEOs,Moderna’s Stéphane Bancel Became the Highest-Paid CEO, he earned nearly $400 million in 2022 thanks to global sales of the COVID-19 vaccine.The total compensation of the top 10 highest-paid CEOs reached $1.4 billion., roughly equivalent to the annual amount the U.S. National Institutes of Health spends on research into drug abuse and addiction.

The pharmaceutical industry stands out. Among the top 10 highest-paid CEOs, five are from companies in the pharmaceutical sector. Of the top 50 CEOs, 13 hail from biopharmaceutical firms, including CEOs of multinational corporations (MNCs) such as Eli Lilly, Pfizer, and AbbVie.

In this analysis, STAT focused on companies with a market capitalization of at least $1 billion, examining data that included CEO salaries, bonuses, stock awards, and other benefits. The results showed that stock remains the most common form of compensation for these top executives, with 81% of their pay derived from stock gains.

According to STAT’s analysis, the decline in healthcare CEO compensation in 2022 was relative. Across global capital markets, the healthcare sector has remained relatively resilient compared to other industries over the past two years, thereby continuing to generate stable wealth for corporate executives.

Of the top ten highest-paid CEOs, five are from companies in the pharmaceutical sector., namely Moderna, Royalty Pharma, Ginkgo, Horizon Therapeutics, and United Therapeutics. The other five companies are Veeva Systems, a SaaS solutions provider for the life sciences industry; Molina Healthcare, a health insurance company; Thermo Fisher, a giant in upstream life sciences tools; McKesson, a pharmaceutical wholesaler; and Oak Street Health, a healthcare enterprise.

Among them, Veeva Systems and United Therapeutics have drawn attention.

Veeva Systems is a company that sells cloud platform software and data analytics to pharmaceutical, biotechnology, and medical device companies. Although the company itself is relatively small in size, its revenue in the most recent fiscal year exceeded $2 billion. Its CEO, Peter Gassner, with substantial compensation of nearly $308 million, has risen to become the second-wealthiest founder in the healthcare industry.

United Therapeutics is a pharmaceutical company founded in 1996, specializing in the research and development of drugs for pulmonary arterial hypertension, itsCEO Martine RothblattRanked first in compensation among female CEOs in the biopharmaceutical industry in 2019, with $45.63 million,This time, she ranked among the top ten in the healthcare industry with a compensation of $56.1 million, becoming one of the few female leaders whose pay exceeded that of male CEOs.

Top-Paid CEOs in the Healthcare Industry, Source: STAT

In 2022, the average compensation for healthcare CEOs was $13 million, with a median of approximately $4.3 million. By comparison, in 2021, the average compensation was $15.3 million, with a median of $7 million.

In 2022, 90 CEOs had annual compensation of at least $10 million, with 17 of them earning more than $40 million. In 2021, over 100 CEOs received annual compensation of at least $10 million, among whom 29 earned more than $40 million.

From 2021 to 2022, the CEO's bonus decreased by approximately 19% overall. In 2022, the median bonus was around $700,000, whereas in 2021, it exceeded $900,000.

The decline in bonuses was attributable to the fact that bonuses are primarily determined by the company’s revenue generation capability, profitability, and other financial metrics. As the company’s overall revenue failed to meet 2022 expectations, the CEO’s bonus amount decreased.

In 2022, the total compensation of the top 18 biopharmaceutical CEOs reached $1 billion.

Among them,Moderna’s Stéphane Bancel has become the pharmaceutical industry’s highest-paid CEO by a wide margin, with compensation of $398 million—equivalent to the combined take-home pay of the six highest-earning CEOs in the biopharmaceutical sector.This situation is similar to that of 2021, when Leonard Schleifer, CEO of biopharma star Regeneron, topped the list with $453 million in compensation, which was $340 million more than Joe Hogan, CEO of Align Technology, the maker of Invisalign clear aligners, who ranked second.

The majority of Bancel’s compensation comes from stock gains. Moderna granted Bancel stock options in August 2013, which are set to expire this year. Bancel has established a corresponding trading plan to enable him to exercise these options and sell the resulting shares. He has pledged to donate the bulk of the proceeds from this transaction to charity.

Following Stéphane Bancel is Pablo Legorreta, CEO of Royalty Pharma, who ranked second in biopharmaceutical CEO compensation with $93.5 million. Uniquely, Legorreta received no salary, bonus, or stock awards in 2022.

This is related to the company’s business model. Royalty Pharma focuses on investments in pharmaceutical royalties, primarily targeting promising drug pipelines. The company executes investment transactions by collaborating with research institutions or pharmaceutical companies to acquire royalty rights for drugs that are already commercialized or possess significant commercial value. In return for its investment, Royalty Pharma receives a share of future revenues generated from the commercialization of these drugs.

Therefore, Legorreta’s entire 2022 compensation was derived from royalty fees. For instance, Royalty Pharma holds significant royalty interests in medications marketed by Biohaven Pharmaceuticals. When Pfizer acquired Biohaven last October, Royalty Pharma earned a total of $479 million, of which $28 million was allocated to Legorreta.

In addition to Moderna and Royalty Pharma, the giants of synthetic biology have also made it into the ranking of the highest CEO compensation in the biopharmaceutical industry.Jason Kelly of Ginkgo Bioworks(USD 83.1 million), a well-established company in the field of autoimmune diseasesTim Walbert of Horizon Therapeutics(USD 66.2 million), a pharmaceutical R&D company specializing in pulmonary arterial hypertensionMartine Rothblatt of United Therapeutics($61.5 million), and its recent market capitalization surpassing $400 billionEli Lilly CEO David Ricks(US$53.3 million).

Jason Kelly of Ginkgo received a salary of only $250,000 last year, with no bonus or new equity awards, but he realized nearly $83 million in gains from previously granted stock.

Tim Walbert of Horizon Therapeutics was already on the list of the highest-paid CEOs in the healthcare industry last year. In 2021, he earned $70.1 million, ranking eighth, and he has maintained this position this year.

Among multinational corporations (MNCs), Eli Lilly’s CEO David Ricks had the highest compensation at $53.3 million, followed by AbbVie’s CEO Richard Gonzalez with $41.65 million; Pfizer’s Albert Bourla and Bristol Myers Squibb’s (BMS) Giovanni Caforio came next.

Among the top 100 healthcare companies, there are also noteworthy CEO compensation packages at certain biopharma or biotech firms.For instance, Christopher Anzalone, CEO of Arrowhead Pharmaceuticals, a representative company in small nucleic acid therapeutics, earned $16.18 million last year, while Samarth Kulkarni, CEO of CRISPR Therapeutics, a star enterprise in gene editing, received $15.33 million in compensation last year. The compensation packages for CEOs at companies such as BioMarin Pharmaceutical and Beam Therapeutics did not differ significantly.

However, STAT calculates executive compensation based on actual realized gains rather than using fair value estimates, which is why some biotech CEOs did not make the top 100 list. For example, Doug Ingram, CEO of Sarepta Therapeutics, topped the traditional biotech CEO compensation chart last year with a total package valued at $125 million. Yet, apart from $1.6 million in cash, his compensation consisted entirely of unvested stock options, so he did not rank highly on this particular list.

STAT conducted a more detailed analysis of CEO compensation across subsectors such as biopharmaceuticals, health insurance, medical devices, and digital health. The results indicate thatCEO compensation varies significantly across different segments of the healthcare industry, correlating with each segment’s market prosperity; their incomes fluctuate in tandem with industry cycles.

In 2022, CEO Compensation in the Health Insurance Industry Hit a Record High, becoming the sector with the second-highest CEO compensation after biopharmaceuticals. The combined compensation of CEOs from seven major health insurance groups exceeded $335 million, representing an 18% increase over the 2021 record.

Among them, Joseph Zubretsky, CEO of Molina Healthcare, led the health insurance sector with $181 million in compensation, ranking third overall among healthcare industry CEOs. More than 80% of the company’s revenue comes from state Medicaid programs covering low-income populations. There was a significant gap between Mr. Zubretsky and the second- and third-place CEOs in the health insurance sector: David Cordani of Cigna earned over $37 million, while Karen Lynch of CVS Health followed closely with nearly $31 million in compensation.

The medical device industry stabilized in 2022, as supply chain disruptions eased and post-pandemic conditions improved, enabling patients to return to hospitals for surgical procedures.The total compensation of the top 10 highest-paid CEOs in the medical device industry last year approached $344 million, comparable to the 2021 figure, when the top 10 CEOs earned $347 million.

However, the highest earner in this sector has changed. The highest-paid CEO of a medical device company is Kevin Lobo of orthopedic device maker Stryker, with compensation of $45 million, an increase of approximately $13 million from 2021.

Although the income of the CEO ranked first in the medical device sector is far behind that of CEOs in the biopharmaceutical and health insurance sectors, the income gap for those ranked second and below has not widened significantly compared to other sectors.Inari Medical CEO William Hoffman ranked second with $42 million, while ResMed’s Mick Farrell and Inspire Medical Systems’ Tim Herbert took third and fourth place with $34 million and $31 million, respectively.

Digital health sector cools in capital markets, leading to sharp declines in take-home pay for some of the industry’s highest-earning CEOs.

Ari Bousbib of IQVIA, a healthcare services provider, received $28.3 million in bonuses last year, a decrease of approximately $30 million from the roughly $60 million he earned in 2021. Doug Hirsch and Trevor Bezdek, co-CEOs of the telehealth company GoodRx, had an annual income of approximately $12 million, largely derived from stock monetization; in 2021, the two generated nearly $42 million in income following stock grants.

In 2022, the overall compensation of CEOs continued to widen the gap with that of ordinary employees in the industry.Among the more than 300 companies included in this analysis, 237 provided STAT with information on median employee salaries. The data show that the annual income of the average worker is slightly below $100,000, with the median figure similar to that of the previous year.

Ordinary employees in the biopharmaceutical sector have once again become the highest-earning group to date, with the majority earning annual incomes exceeding $200,000.VCBeat has previously highlighted the pay gap between CEOs and employees in the biopharmaceutical sector. This disparity tends to be more pronounced in large pharmaceutical companies, whereas mid-level compensation is relatively higher at smaller biotech firms. This is because the workforce at these smaller companies consists largely of scientists and researchers with extensive academic and industry backgrounds, necessitating higher salary packages.

Those who provide home care or work in nursing homes earn the least.Some healthcare companies are increasing employee compensation to prevent staff turnover and reduce reliance on temporary workers.

However, analysis shows that these pay raises have not narrowed the vast gap between them and the CEO.The income of most CEOs in the healthcare industry is at least 64 times that of ordinary employees.The largest disparity occurred at medical supplier Owens & Minor, where CEO Edward Pesicka earned $23.2 million in 2022, while the median annual employee income was just $6,216—making the CEO’s compensation more than 3,700 times the median employee pay.

Top 10 Companies with the Largest Gap Between CEO Compensation and Median Annual Employee Income, Source: STAT

Reference Article:

Health care CEOs hauled in $4 billion last year as inflation pinched workers, analysis shows，STAT