Medicis Doubled Pay of Exec Convicted of Off-Label Sales

Medicis more than doubled the pay of its sales chief in 2008 even though that executive, Richard Havens, pled guilty to conspiracy to violate the Food and Drug Act last March. Havens, the former evp of sales, and three of his underlings pleaded guilty right before his April retirement to promoting an off-label use of Loprox, a skin infection treatment. They had promoted it for diaper rash even though it was not approved for children.

In Medicis’ proxy statement, CEO Jonah Shacknai saw his total compensation fall in 2008 from $4.6 million to $4.1 million. The other top managers at Medicis saw their total compensation stay roughly flat.

The only standout was Havens, whose packet increased from $1.5 million to $3.9 million. That included a $430-per-hour consultancy deal. He got $600,000 on that deal, plus another $1.9 million in cash in his retirement agreement. He also got stock and options. He was not terminated for cause, despite committing a crime, the proxy statement says.

Here’s the summary table:

• Name, 2008 pay, 2007 pay
• CEO Jonah Shacknai, $4.1 million, $4.6 million
• EVP prod. dev. Joseph Cooper, $1.5 million, $1.6 million
• General counsel Jason Hanson, $1.3 million, NA
• EVP sales Richard Havens $3.9 million, $1.5 million
• CFO Richard Peterson, $1.1 million
• COO Mark Prygocki, $1.8 million, $1.8 million
• Chief science officer Mitchell Wortzman, $1.5 million, $1.4 million
  Numbers are rounded, includes stock and options whose value may change.

Aside from Havens’ compensation, the change in pay has been modest considering the difficult year the company has had. It’s primarily a vanity pharma company, and is thus affected by the pullback in discretionary spending triggered by the recession. Nonetheless, the company saw revenues grow from $442 million to $501 million; net income declined from $70.4 million to $10.2 million. (Put another way, had Havens been terminated for cause, receiving a fraction of his retirement pay, Medicis’ net income could have been closer to $14 million.)

The company’s sales efficiency for the year was flat, but a cut in SG&A in Q4 2008 helped drive it up to $2.06 by year-end, the highest it’s been in four quarters.

In terms of products, the company saw increases in Solodyn sales that more than offset declines in demand for dermal fillers Perlane and Restylane, which dropped 20 percent. Medicis also saw off patent challenges from Teva and Impax. It still must weather a new set of challenges from companies such as Sandoz.

The good news on the horizon? Reloxin, its challenger to Allergan’s Botox, is on its way. The increased competition will be enough to give anyone wrinkles.

Side note: You can tell Medicis is different from other pharma companies. When most firms put families or goggled scientists on the cover of their annual report, Medicis has a hot naked chick. The company makes prescription beauty treatments, so why hide it? As you can see, they had a disconcertingly perfect looking model on the cover of the 2007 report as well, but this year they’ve turned up the heat with extra nudity.

• See BNET’s previous coverage of Medicis:
• Medicis Employees Should Look Anxiously at Allergan Layoffs
• Medicis Solves One Solodyn Problem But Barr Pops Up With Another
• Medicis Squeezed in Vanity Pharma Death Match vs. Allergan and J&J
• Medicis Explains Sudden Increase in Company’s Deferred Tax Assets
• The Allergan-Medicis Vanity Pharma Death Match Is About to Get Complicated

• See previous BNET stories on pharma executive compensation:
• Elan CEO Martin’s Pay Cut by Half
• Mylan Execs Get 41% Raise; CEO Takes Company Jet on Vacation for “Security” Reasons
• Valeant Executive Pay Doubles to $19.7 Million Despite Quadrupling of Company’s Losses
  
• Shire CEO Compensation Report Successfully Conceals CEO Compensation
• BMS Execs Get Cash Not to Ride Private Jets; 61% Pay Raise to $59 Million
• Allergan CEO Pyott Received Pay Raise to $11.9 Million
• Abbott CEO White Takes a Pay Cut
• Gilead Executive Pay: Modest Raises for Outstanding Performance
• Gilead Deal Gives CV Therapeutics CEO $8.4 Million Payday Despite Lack of Profits
  
• Pfizer’s Kindler Got $4.2 Million Pay Raise, Despite What Business Press Says
  
• Pfizer Execs’ Golden Parachute Is Actually a Pay Cut
  
• Genentech’s Levinson May Have No Change-of-Control Agreement in Roche Deal
  
• Amgen CEO Sharer: Options? No Thanks. I’ll Just Take the Cash.
  
• Schering CEO Hassan Has $59 Million Buyout Agreement in Merck Merger
  
• Merck Executive Pay: $36 million, Use of Private Jet, Cash Bonuses Despite Failures
• Eli Lilly Execs Receive $48 Million in Pay; Plus Chairman Taurel Adds $40 Million Nest Egg
  
• Novo Nordisk Executive Compensation: A Picture of Modesty (Except for the Car Expenses)
• As Layoffs Begin, Wyeth Execs Get $75 Million Severance Package
• How Pharma’s CEO Pay Packages Measure Up