Bayer CEO Takes Pay Cut Amid Restructuring Efforts; Industry Compensation Trends Emerge

Bayer AG's CEO Bill Anderson saw his total compensation package decline by 21% in 2024, as the German conglomerate entered the second year of a major restructuring initiative. The pay cut comes amid a challenging period for Bayer, which continues to grapple with ongoing litigation and the need to revitalize its pharmaceutical pipeline.

Anderson's Compensation and Bayer's Restructuring

Bill Anderson, who joined Bayer in April 2023 and assumed the role of CEO in June of that year, received a total compensation of 8.84 million euros ($9.6 million) in 2024. This represents a significant decrease from his 2023 package of 11.24 million euros, which included a one-time "indemnity payment" of 3.8 million euros upon joining the company from Roche.

The reduction in Anderson's pay coincides with Bayer's ongoing restructuring efforts, which have already resulted in the layoff of approximately 7,000 full-time employees by the end of 2024. Anderson has warned investors that 2025 is expected to be the "toughest year for our turnaround," highlighting the challenges that lie ahead for the company.

Despite the overall decline in compensation, Anderson saw increases in his short- and long-term stock incentives in 2024, receiving approximately 2 million euros and 3.6 million euros in these categories, respectively. Bayer's compensation committee acknowledged the challenging nature of 2024, citing the initiation of the company's three-year restructuring period as a factor in determining the CEO's reward.

Pharmaceutical Industry Performance and Litigation Challenges

Bayer's pharmaceutical division managed to achieve modest growth in 2024, with sales increasing by 1.7% in the fourth quarter and 0.3% for the full year. However, the company's consumer and crop science revenues continued to decline. With its blockbuster drug Xarelto facing generic competition, Bayer does not anticipate significant pharmaceutical growth until 2027.

The company continues to face substantial litigation related to its 2018 acquisition of Monsanto, particularly concerning claims that the weed killer Roundup causes cancer. To address these legal costs, Bayer has indicated it will seek shareholder approval for a potential equity offer worth 35% of its outstanding shares. The company has already spent approximately $10 billion out of a $16 billion allocation to handle U.S. Roundup lawsuits, with about 67,000 claims still pending.

CEO Compensation Trends in the Pharmaceutical Industry

Anderson's 2024 compensation package falls below those of his counterparts at other major pharmaceutical companies, reflecting a broader trend in executive pay within the industry. Notable comparisons include:

• Novartis CEO Vas Narasimhan: $15.7 million (6.9% increase)
• Roche CEO Thomas Schinecker: $11.1 million
• AstraZeneca CEO Pascal Soriot: $21.9 million (16% decrease)
• GSK CEO Emma Walmsley: $13.4 million
• Novo Nordisk CEO Lars Fiorard Jorgensson: $8.3 million (16% decrease)

While European pharmaceutical CEOs have historically received lower compensation compared to their U.S. counterparts, this gap appears to be narrowing in recent years. The variations in CEO pay across these companies reflect the complex challenges and performance metrics unique to each organization within the rapidly evolving pharmaceutical landscape.