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Bristol Myers CEO Caforio takes pay cut as ‘human capital’ metric drags down bonus

Bristol Myers Squibb is hoping new launches will offset a wave of forthcoming patent losses for some of its biggest-selling drugs. But in the meantime, CEO Giovanni Caforio just received a smaller pay package.

BMS awarded Caforio $19.78 million in 2021 pay, down from $20.15 million the prior year, a proxy filing shows.

The chief executive saw his salary slightly increase to $1.7 million and stock awards rise nearly half a million dollars to $13.97 million. But Caforio’s cash incentive pay dropped 17% to $3.41 million, a low dating back to 2017.

BMS met or exceeded several targets that it has set to evaluate its executives’ pay. The company’s revenues, excluding the effect of foreign exchange rates, reached $46.2 billion and came above the company’s $45.8 billion target. The board said BMS’ pipeline development also exceeded expectations.

Interestingly, when it comes to Caforio’s personal goal, the board said BMS “exceeded all customer service metrics and supply chain reliability targets,” even though it has publicly described a struggle to meet cell therapy demand because of production constraints.

The company also achieved eight positive pivotal clinical trial results, including for a fixed-dose immuno-oncology combination, which was approved last week by the FDA as Opdualag.

Beyond the business metrics, the company’s performance lagged in the “human capital” category, leading to a 73% payout against that goal. The item focuses on employee engagement and retention by incorporating quarterly employee surveys and voluntary attrition rate. BMS failed to hit target on the quantitative human capital goal, even though the board said it at least met industry benchmarks.

Last year, BMS published its inaugural diversity & inclusion report and ESG report. The company has committed to double executive representation of both Black and Latinx employees in the U.S. by the end of 2022.

For Caforio’s personal target, the helmsman “demonstrated extraordinary leadership during the COVID-19 pandemic,” the company said, as the drugmaker faced no disruption to the supply of medicines to patients and the majority of the U.S. and Puerto Rico vaccinated workforce has returned to the office.

Overall, Caforio got $3.41 million for his cash incentive award against a target of $2.55 million.

Meanwhile, the New York pharma is bracing for patent cliffs to the top 3 best-selling drugs in its portfolio, starting with Celgene-inherited blood cancer drug Revlimid this year in the U.S. BMS expects off-patent brands will suffer a revenue decline in the range of $12 billion to $14 billion between 2020 and 2025.

Caforio has devised a plan for BMS, which involves multiple blockbuster launches that it hopes could contribute over $25 billion in total revenue in 2029. Last year, BMS counted 25 approvals and label expansion, including first launches of cell therapies Breyanzi and Abecma.