Benefits July 9, 2003

Study: Life Sciences Firms Still Linking Pay, Performance

July 9, 2003 (PLANSPONSOR.com) - 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.

Reported by

Fred Schneyer

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 http://www.presidiopay.com .