Institution Theme Category Industry
  • Wellington Management
  • Governance
  • Compensation
  • Pharmaceuticals
Company Year Market Link
Regeneron Pharmaceuticals 2019 N/A https://www.wellington.com/uploads/2020/10/4dc06a6392f39bcacb4ae0bcaa9a5aeb/664_11_a4_wmc.pdf

The company had been scrutinized for the quantum of its executive and director compensation. We believe in a pay-for-performance philosophy, and we encourage plan structures that align management compensation with shareholder experience, incentivizing long-term performance. We consider the quantum of pay on a case-by-case basis, comparing the company’s figures to peers of similar size, industry, and market. We also support board declassification and annual director elections
We provided feedback on these issues, including with the chair of the compensation committee, pursuant to prior meetings. While we think this company is doing the right things with regard to culture, compliance, and long-term sustainability, we have engaged on other governance practices as well, including its entrenched, classified board; legacy dual-class-share structure; and succession planning.
While some boards pay primarily in cash, here, director pay was primarily option based, meaning realized pay did not match headline numbers. While the board acknowledged that this created reputational noise, directors were more motivated by the company’s strategy and value proposition. Regarding executive compensation, we learned more about how the board uses discretion to overlay the quality and impact of the drug pipeline when determining awards. Board refreshment is ongoing. Recent additions have added significant value in our view, and the board plans to bring on two additional directors with data science and global regulatory experience.

Details

  • Proponent
  • Management
  • Resolution
  • Director Pay
  • Vote
  • For
  • Rationale
  • N/A
  • Details
  • The company announced a reduction in director pay of more than 50% and the transition of some options to restricted stock units in the equity-based portion of pay. While we generally favor a clearly defined pay structure as opposed to substantial discretion, this case underscored the value of taking a case-by-case approach to evaluating compensation plans.
    We are pleased that the board seems genuinely open to declassifying, recognizing that its desire to maintain a classified board to facilitate long-term thinking no longer outweighs shareholder opposition and scrutiny.