Meeting date: June 4, 2015
According to press reports, both ISS and Glass Lewis have recommended against the $36,635,468 pay package for Vertex CEO Jeffrey Leiden. Reasons for shareholders to vote against the package include:
- An astonishing increase in pay, despite the fact that the company did not make a profit in 2014. Leiden received a 179% increase in pay in 2014.
- Excessive and unjustified “retention” bonuses
- Low threshold for “performance” based payments. As Boston Globe columnist Steven Syre describes it, “Everyone gets their bonus as long as Vertex makes a profit — any profit at all — over the next three years. That’s got to be a joke. Considering the billions the stock market expects us to pull in over the next few years, earning anything less than a very large profit should be grounds for termination — not the trigger for a bonus windfall.”
The high package may be particularly offensive to some given the fact that the company’s new cystic fibrosis drug is predicted to have a wholesale price of $287,000 annually per patient, an amount that will present an extraordinary burden for desperately ill patients, their families, and society.
Shareholders will vote at the meeting on a proposal submitted by the UAW Retiree Medical Benefits Trust that calls on the Board to issue a report to shareholders from rising pressure to contain U.S. specialty drug prices. The report should address Vertex’s response to risks created by:
- The relationship between Vertex’s specialty drug prices and each of clinical benefit, patient access, the efficacy and price of alternative therapies, drug development costs and the proportion of those costs borne by academic institutions, foundations or the government;
- Price disparities between the U.S. and other countries and public concern that U.S. patients and payers are shouldering an excessive proportion of the cost burden; and
- Price sensitivity of prescribers, payers and patients