Study: Life Sciences Firms Still Linking Pay, Performance

July 9, 2003 ( - US life sciences companies have continued to compensate senior managers for delivering on their promises by linking compensation to theirs and the firm's performance.

That was the finding of a study by San Francisco-based Presidio Pay Advisors, Inc., which reported that life sciences companies are keeping up the pay/performance linkage through annual cash incentives and equity based incentives such as stock options.

In fact, the study reports that 70% of annual compensation in the life sciences sector is linked to company and executive performance. Median chief executive officer performance-based pay was approximately $1,426,000 in the most recent fiscal year, equivalent to 73% of their total pay package of $1,937,000, according to the study.

The study also found that:

  • Stock options continue to be the most prevalent method of delivering long-term incentive compensation, however, 30% of companies said they used restricted stock, often in addition to stock option grants.
  • Founding chief executive officers owned 3.5 times more oftheircompan y’s stock and stock options than non-founding chief executive officers, with founding CEOs holding a median of 4.85% of total shares outstanding.

TheLife Sciences Industry- Executive Compensationstudy covers pay levels for 14 senior management positions at 62 life sciences companies. For more information, go to .