Executives don’t just get paid big bucks to operate a company. Sometimes they get paid millions to walk away.
Have you ever wanted to be paid millions of dollars to not work? Well, if you’re a corporate executive, your compensation package will often include such a clause, commonly known as the golden parachute. In pharma, the biggest of all the parachutes belongs to Eli Lilly’s David Ricks, who will take home $131.4 million when he is replaced.
There are myriad ways these termination payments can be triggered: being fired with or without cause, on retirement, in the event of a merger or acquisition and so on. Executives also have clauses offering compensation in the event of death or injury. The largest payouts tend to be for termination with replacement, meaning the CEO is let go and another comes in to take his or her place.
That’s where Ricks’ market-topping pay would come from. It’s no surprise he has the largest payout of the top 20 pharmas by market cap. He also has the largest salary of all, with $29.2 million total compensation for 2024. If Ricks voluntarily leaves, he will get nothing from Lilly. Often, executives will negotiate payments from their hiring company to cushion the blow. If Ricks is removed involuntarily (read: fired) with or without cause outside of a planned CEO transition, he would receive $45.1 million.
Next on the list of largest golden parachutes is Gilead’s Daniel O’Day, who would receive $80.6 million in the event of involuntary termination without cause or resignation for good reason with a change of control. If he is terminated without cause, he’d receive only $11.6 million.
Merck’s Robert Davis has the smallest golden parachute across the board, with just $20.7 million due if he is terminated and replaced. He would receive $1.7 million if terminated with or without cause. Johnson & Johnson’s Joaquin Duato, who typically lands near the top of the highest-paid CEOs list, has a small termination package as well, with just $123,000 due if he is fired with cause, $22.6 million if he’s fired without cause and $20.5 million if he leaves voluntarily.