Gilead Sciences

Annual meeting: May 11

Martin Shkreli has gotten all the attention, but there’s another pharmaceutical Martin who had reaped a fortune from high priced drugs: former Gilead CEO John Martin. For years, Wall Street was a fan of Gilead as profits and revenues grew based on two Hepatitis C drugs. However, the stock is now 20% off its peak, which was reached in June 2015.

The publicity around the Shkreli case as well as the awareness of record highs in pharmaceutical costs, has brought new and unwanted attention to the industry. In January, for example, the Massachusetts attorney general wrote to Gilead, noting that the price of the drugs Sovaldi ($84,000 per course) and Harvoni ($94,500 per course of treatment), “effectively allows hepatitis C to continue spreading through vulnerable populations, as opposed to eradicating the disease altogether.”

While John Martin is known as a respected business leader and hasn’t purchased any Wu-Tang Chan albums with his windfall (so far as we know) he has reaped a fortune.
To realize his take you need to look beyond the summary compensation table, with total disclosed compensation of over $18 million. The real money was in his stock sales.

During 2015 alone Martin acquired 1.8 million shares through the exercise of options, realizing a value of $164,515,350. Over the same time period, 597,440 stock awards vested, providing him an additional $61,695,154 in value. So $22 million dollars.

As of February 29, 2016, Martin owned 9.014 million shares including 5 million shares subject to stock option. This was actually very close to the amount he owned in of February 28, 2011: 9.06 million shares. So his stake in the company did not increase overall, he just churned through options. Every year Martin exercised options and realized gains on shares. From 2011 through 2015 he exercised over 11 million options, realizing more than half a billion dollars in value. In other words the different between what he had to pay for the option and the prices at the time totaled $573,836,800. At the same time nearly two million of his performance shares vested for an additional $123 million dollars.

Those stock sales – which came in addition to salary, cash bonus, etc. – would be enough to buy a course of Sovaldi treatment for 84,000 people suffering from Heptatis C. Even more, if the drug price were lowered.