By Maria Armental And Angela Chen
Merck & Co.'s total compensation for its chief executive
rose sharply in 2014 to $25 million from the year-ago period,
according to a regulatory filing.
The pharmaceutical company said Chief Executive Kenneth C.
Frazier, who also chairs its board, saw an 87% increase in the
value of its total compensation, largely due to stock awards. Mr.
Frazier's base pay remained at $1.5 million.
Meanwhile, Chief Financial Officer Robert M. Davis, who joined
the company in April 2014, received total compensation valued at
$12.8 million, including a sign-on bonus of $2.5 million. Mr.
Davis' base pay was $650,384. Total compensation for his
predecessor, Peter N. Kellogg, was valued at $5.4 million, up 10%
from the year earlier.
And general counsel Bruce N. Kuhlik's total compensation was
valued at $6.2 million, up nearly 71% from the year earlier. Mr.
Kuhlik's base pay rose slightly to $807,492.
On Monday, Fitch Ratings downgraded the pharmaceutical company's
rating to A, from A-plus and revised its outlook on the Whitehouse
Station, N.J., company to stable from negative, citing improving
margins.
The rating firm said it expects Merck to continue to favor share
repurchases over deleveraging, with further debt-funded stock
buybacks hanging over the company's credit profile.
In March, Merck increased its stock-buyback authorization by $10
billion and has about $11.7 billion set aside for possible stock
buybacks, Fitch said.
Fitch estimated Merck will continue to generate about $3.7
billion to $3.8 billion in free cash flow this year as margins
improve, and that the threat of sales falling due to patent
expiration is manageable.
In February, Merck reported that fourth-quarter sales fell 7.4%
to $10.48 billion, with foreign currency exchange rates accounting
for three percentage points of the drop. Sales of the
anti-inflammatory drug Remicade, which Merck markets in outside the
U.S., declined 10% due to competition from biosimilar versions in
Europe.
Shares, up 1.45% over the past 12 months, closed Monday down
less than 1% at $56.73.
Write to Maria Armental at maria.armental@wsj.com and Angela
Chen at angela.chen@dowjones.com
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