United Therapeutics (UTHR) today announced major changes in its C-suite structure and compensation, including the news that Current Chief Executive Officer Martine Rothblatt has agreed to a cut in her compensation and will become co-CEO when current Executive Vice President and Chief Operating Officer Roger Jeffs is promoted to co-CEO beginning on Jan. 1, 2015. On the same date, David Zaccardelli will become executive vice president and chief operating officer.
Rothblatt, as chairman of the board and co-CEO, will remain the "principal executive officer," according to the company. "The Board of Directors is very pleased to approve this unique organizational structure proposed by Dr. Rothblatt," said Christopher Patusky, lead independent director and vice chairman of the board of directors, in a statement.
The board of directors also expressed gratitude to Rothblatt for her "flexibility" during the process of adjusting her compensation. Earlier this summer, proxy advisors Institutional Shareholder Services Inc. and Glass, Lewis & Co. criticized Rothblatt's compensation, which jumped $30.2 million from 2012 to 2013, reported Nasdaq.com.
In the wake of a "Say on Pay" vote by its shareholders, which was a non-binding advisory vote, United Therapeutics put forward a new compensation package for Rothblatt. The package revokes her previously agreed upon requirement that the company award her an annual grant of full-vested stock options, capped at one million shares per year—dependent upon the company's market capitalization. This agreement has been in place for the past 15 years.
Rothblatt and the Compensation Committee agreed to an incentive package that will be a 70 percent reduction from her current package. The incentives will now depend on company-wide performance measures rather than market capitalization.
"It is unusual for an executive to voluntarily waive the right to a contractually bargained-for benefit," Chairman of the Compensation Committee of the Board of Directors Christopher Causey stated. "She has demonstrated exceptional leadership on this issue," he continued.
"As Chairman of the Board of Directors, I share our owners' concerns," Rothblatt said in a statement. "I am pleased that we have been able to so quickly agree on a new incentive compensation structure going forward."
Rothblatt also expressed her pleasure that the board of directors approved the promotions of both Jeffs and Zaccardelli. She pointed out that they both led the successful effort to earn the U.S. Food and Drug Administration's approval of the company's Orenitram (treprostinil) Extended-Release tablets for the treatment of pulmonary arterial hypertension (PAH) in 2013.