An Improving Allergan Rewards Its Top Exec
Allergan Inc. Chief Executive David Pyott’s pay doubled to more than $8.1 million last year, a reward for the company’s growing profits and other successful moves, the company said in a regulatory document.
Most of Pyott’s compensation came in the form of stock options in the Irvine maker of contact lens care products and skin treatments. The company valued Pyott’s options at about $6.7 million when they were granted. The executive got a $701,538 salary and a $676,000 bonus, according to a proxy filed with the Securities and Exchange Commission.
A year earlier, Pyott got a compensation package valued at about $4.1 million. His 1998 pay included a one-time “stock price incentive plan” payment of $1.8 million tied to gains in Allergan’s share price. That incentive plan wasn’t continued in 1999. Pyott in 1998 also got a salary of $604,615, a $700,000 bonus, and options the company valued at $960,000.
The executive compensation committee of Allergan’s board said in the proxy filing the 1999 pay package rewarded effective performance by Pyott, 45, who became president and chief executive in January 1998, after heading Novartis AG’s nutrition division.
“The committee noted particularly the company’s profitable growth during 1999, Mr. Pyott’s effective implementation of strategic plans and organizational restructuring, his successful recruiting efforts to fill key positions, and his efforts to reduce operating expense ratios on a global basis,” the filing said.
Allergan earned $188.2 million last year, compared with a $90 million loss the previous year, as sales rose 8.5% to $1.4 billion.
In 1999, Pyott got options to buy 642,000 Allergan shares. About 400,000 of the options can’t now be profitably exercised because they have an exercise price of $55 per share, which is more than Allergan’s current market price.
The stock rose nearly 54% last year. Allergan shares, which have slipped 5% this year, closed Tuesday at $47.19, off 6 cents, in trading on the New York Stock Exchange.
Allergan’s filing listed executive options using a formula to estimate their value the day the board awarded them. Some other companies use a different method, which calculates an executive’s potential profits if company shares rise a certain percentage during the term of the option grant.
Because the SEC lets companies use either method in proxy statements, it is difficult to compare executive pay from one company to another, even if they’re in the same industry.
Allergan Chairman Herbert Boyer is paid an annual retainer of $250,000 and fees for attending board meetings.
