Noven Execs Got Bonuses Despite 2 Product Recalls

Noven rewarded its top managers with hundreds of thousands of dollars in bonuses last year despite the company’s flagship Daytrana ADHD patch being mired in two product recalls.

Noven has had a rough couple of years. The FDA identified manufacturing problems with Daytrana back in 2007, and they still aren’t fixed. Consumers had difficulty peeling the backs off the patches properly, with the result that twice in 2008 the company had to recall its products.

Noven’s revenues and net income both went up, although the latter (just $21 million) was reduced by a $4 million charge the company had to pay its sales partner, Shire, for screwing up the Daytrana patches. And the company warned in its 10K that it might not have seen the end of its recalls:

… we expect the peel force issue to continue to negatively affect margins…

How did this amateur-hour performance affect the compensation of Noven’s top execs? They all got cash bonuses. Although the total compensation of the company’s top execs stayed roughly the same, their cash and perks — 401(k)s, life insurance, “airline club membership,” etc — all went up.

Here’s the summary table:

• Name, 2008 pay, 2007 pay, 2008 cash bonus
• CEO Peter Brandt (pictured), $2 million, NA, $366,000
• Ex-CEO Robert C. Strauss, NA, $3.9 million, NA
• EVP Jeffrey F. Eisenberg, $1 million, $753,000, $182,000
• CFO Michael D. Price, $571,000, $52,000, $129,000
• VP operations Richard P. Gilbert, $549,000, NA, $117,000
• Chief science officer Steven M. Dinh, $383,000, $80,000
• Chief medical officer Joel S. Lippman, $319,2000, NA, $73,000
• Chief technical officer Juan A. Mantelle, $659,000, $659,000, $115,000
  “Pay” includes cash, perks, and stock and options whose value changes over time. The cash bonus is included in the “2008 pay” number.

You’ll notice that four of these folks are new to the company in 2008, and one (the ex-CEO) left at the beginning of the year. Dinh and Lippman got signing bonuses — meaning they were paid extra just for showing up.

It is perhaps not surprising that these execs earned their bonuses. Here are the range of criteria that the compensation committee looks at to decide whether an exec gets a bonus:

… total or net revenue; revenue growth; EBIT or EBITDA; operating income; net operating income after tax; pre-tax or after-tax income; cash flow; cash flow per share; net earnings; earnings per share; profit growth; return on equity; return on capital employed; return on assets; economic value added (or an equivalent metric); share price performance; other earnings criteria or profit-related return ratios; successful mergers, acquisitions of other companies or assets and any cost savings or synergies associated therewith; successful dispositions of subsidiaries, divisions or departments of Noven or any of its subsidiaries; successful financing efforts; total stockholder return; market share; improvement in or attainment of expense levels; improvement in or attainment of working capital levels; debt reduction; or FDA regulatory milestones, such as product approval.

In sum, execs get bonuses based on pretty much anything that the company could possibly do.

• See previous BNET stories on pharma executive compensation:
• Onyx Makes a Profit and Management Takes the Cash
• Medarex Execs Got 10% Pay Raise Despite Delivering Nothing
• Sepracor CEO Got 44% Raise as He Planned 940 Layoffs
• Medicis Doubled Pay of Exec Convicted of Off-Label Sales
• 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
• Wyeth CEO Got 69% Pay Raise; Was “Required” to Use Helicopter; Plus $24 Million Pfizer Sale Bonus
• 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