Patrick Soon-Shiong has rigged himself the richest pay package for an executive in the biopharma industry. NantKwest filed a proxy yesterday that outlined a payout valued at $148 million for the biotech billionaire, who took his newly acquired company public last year during the waning days of the biotech IPO boom.
Soon-Shiong’s pay package ranks as one of the biggest ever, and it dwarfs what most of the top-paid execs get. Last year the highest paid CEO in biopharma was Regeneron’s ($REGN) Len Schleifer at $42 million. And this year the highest paid exec to date has been Horizon’s Timothy Walbert, who scored a whopping $93 million.
Soon-Shiong puts them all to shame.
Soon-Shiong’s $147.6 million compensation package depends almost entirely on equity. His base salary was just $1, and his cash bonus rang in at $386,301. His stock awards, on the other hand, amounted to $15 million, and his options were worth even more--much, much more--at $132 million. And most of that $132 million lies in his right to purchase shares at about $2 each.
Soon-Shiong collected two bonus rounds in 2015: In July, when he agreed to stick around as CEO, NantWest awarded 1.85 million options at an exercise price of $2.20 and a stock warrant for another 17.6 million shares at $2. The options vest monthly over a four-year period--as a sort of CEO-retention plan--and the warrants vest similarly over 40 months, with some shares subject to performance goals.
And later that month, when NantWest’s IPO wrapped up, Soon-Shiong garnered an option for another 900,000 shares and a restricted stock grant worth 600,000 shares. This option came with a much higher exercise price, however--at $25 per share, it’s far above NantWest’s current trading price. These equity awards vested at 50% immediately, and another 50% are due to vest at the one-year IPO anniversary on July 27.
NantKwest, though, has seen its share price shrivel over the past 6 brutal months for biotech stocks. Shares closed yesterday at $8.71, far off the $37 opening price last July when small investors were still attracted to high-risk stocks.
Most of that valuation was built entirely on Soon-Shiong’s reputation as a blockbuster-making executive. He had acquired the company after it had invested only $60 million into research.
Aside from working with what the company calls a naturally superior cell killer, NantKwest believes that it can coordinate an NK (natural killer) cell as well as a T cell attack on cancer, using a PD-L1 antibody. And because their activated NK cells don't have to be extracted from the patient, Soon-Shiong believes they could vault past the pioneers and into the leadership at a crossroads of hot new cancer drug technologies.
That's a strategy that he puts a very high personal valuation on.