CEOs at contract research organisations (CRO) earn millions of dollars a year and the reasoning behind this, and differences between companies, is detailed below.
There was some variation in the basic salaries of the six CEOs in 2008, as shown in the chart below. Josef von Rickenbach of Parexel had the smallest basic salary, earning $550,000 (€379,000), and James Foster had the biggest, earning $950,000.
Basic salaries are based on a combination of factors, with the CROs considering what their peers are paying executives, the experience of the individual and how long they have been at the company.
The difference in wages becomes more pronounced when the total pay is looked at. These figures include bonuses, stock awards and other compensation that can significantly increase CEOs’ earnings.
For instance, the extras increased the basic salary of Joseph Herring, CEO of Covance, by 641 per cent resulting in total earnings of $5.41m. Foster’s basic salary rose by 579 per cent and other CEOs had smaller but still significant earnings.
This is shown on the chart below. Candace Kendle, CEO of Kendle, had the smallest extras payments, which increased her basic salary by 33 per cent.
Variable, performance based payments are regarded by the CROs as an important aspect of operations, with Charles River describing stock incentives as an important technique to “attract, motivate and retain key employees and directors”.
The incentive payments are made based on the achievement of financial and non-financial goals. Below is a chart showing how many US dollars each CEO earned for every $1000 of revenue the company generated.
All figures are taken from companies' regulatory filings with the US Securities and Exchange Commission.