Correction: A previous version of this story incorrectly said “say on pay” referendums rarely pass. This version has been corrected.
Silver Spring-based United Therapeutics has slashed the compensation of chief executive Martine Rothblatt, one of the highest paid executives in the country last year, after large shareholders criticized the amount of money she made.
Rothblatt collected $38.2 million in compensation during fiscal year 2013 as the chairman and chief executive of United Therapeutics, a life sciences company specializing in treatments for respiratory and cardiovascular illnesses.
That figured landed her the No. 1 spot on the Capital Business ranking of best compensated executives in the Washington region, and the No. 10 slot on a New York Times list of the highest compensated executives in the nation.
Rothblatt was the only woman to crack the top 30 on the national list.
The annual paycheck was something of an anomaly for Rothblatt — her compensation for the prior year was $5 million — resulting from a surge in United Therapeutics’ stock price. Nevertheless, the total caught the eye of the company’s large shareholders.
“This is one of those situations where a company can become the victim of its own success,” said spokesman Andy Fisher.
“There was much made of the fact that Martine was the highest paid female CEO in the country. That was largely a result of the tremendous success the company had in 2013 and the fact we had a drug approved [by regulators] that few people seemed to think we would get approved,” he added.
Shareholders voted against United Therapeutics proposed compensation package during an annual meeting in June. Such Say on Pay referendums rarely fail, so the down vote pushed the board to reconsider how it pays executives.
Rothblatt agreed to amend her existing contract and allow for the pay cut, Fisher said.
“As chairman of the board of directors, I share our owners’ concerns,” Rothblatt said in a statement. “I am pleased that we have been able to so quickly agree on a new incentive compensation structure going forward.”
The overwhelming majority of Rothblatt’s compensation came from option awards. She was previously entitled to as many as 1 million fully vested stock options each year under a provision that, according to the company, has been in her contract since before United Therapeutics went public 15 years ago.
That perk has now been reduced to 300,000 special awards that track the price of shares, which will vest over a period of four years. Their value will be determined by the company’s performance in five areas, including cash profits, financial growth, manufacturing, research and development, and ethics.
“We are most appreciative of the flexibility Dr. Rothblatt has demonstrated through this process,” Christopher Causey, chairman of the board’s compensation committee, said in a statement. “It is unusual for an executive to voluntarily waive the right to a contractually bargained-for benefit, but once again, she has demonstrated exceptional leadership on this issue.”
The decision comes as officials also announced Rothblatt will share the CEO mantle beginning Jan. 1 with Roger Jeffs, who joined United Therapeutics in 1998 and currently serves as president and chief operating officer. He will become co-chief executive.
Fisher said Jeffs’ promotion “reflects a division in responsibilities that the two of them have had for sometime.” Rothblatt focuses on long-term strategy and research, while Jeffs handles commercial operations and near-term research, he said.
David Zaccardelli will subsequently be promoted to executive vice president and chief operating officer. Zaccardelli, who joined the company a decade ago, holds the titles of chief manufacturing officer and executive vice president of pharmaceutical development.
“The elevation is one of recognition of some significant contributions that the two people who were promoted have made,” Fisher said.
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