When Roy Vagelos was forced to retire in 1994 as chief executive officer of Merck & Co. at the mandatory age of 65, he feared boredom. So he joined Regeneron Pharmaceuticals Inc.’s board, a move that would make him a billionaire.
Vagelos has amassed a net worth of $1.3 billion from his director compensation, according to the Bloomberg Billionaires Index. It’s a rare source of fortune, as the average board member in the U.S. is seldom paid more than $1 million annually, according to data compiled by Bloomberg.
When he joined the Tarrytown, New York-based company in 1995, it sold him 600,000 shares at 50 cents a piece, an 86 percent discount to their price, and kicked off annual option grants that routinely placed him among the highest-paid directors in the U.S. Vagelos, 86, has since helped deliver a 16,000 percent surge in Regeneron’s value.
“Every once in a long while, you find a scientist who has deep understanding of the scientific basis of disease, but who also is a great manager -- Vagelos is one of that rare breed,” said Mike Brown, a Nobel Prize recipient and Regeneron board member who recruited Vagelos as the company’s chairman. “He was probably the most successful pharmaceutical company leader of that era."
Vagelos declined to comment through Alexandra Bowie, a Regeneron spokeswoman. Bowie did not respond to e-mails and phone calls seeking Regeneron’s comment.
Vagelos joins the company’s founder Leonard Schleifer and Chief Scientific Officer George Yancopoulos as billionaires. For four years, Vagelos’s contract stipulated that he receive either 125,000 options, or 25 percent more options than any of Regeneron’s executives, whichever was higher, filings show.
In the Russell 3000 Index, average director compensation tops $1 million at only 15 companies, according to data compiled by Bloomberg. By comparison, the 10 highest-paid U.S. executives have been awarded compensation packages of more than $90 million, according to the Bloomberg Pay Index.
The former university and government scientist is a legend in the pharmaceutical world. He joined Merck in 1975 and became its chief executive officer 10 years later, transforming the way the industry discovered new products and ushering several blockbuster drugs to market. The week he joined Regeneron, which had recently failed to get a Lou Gehrig’s disease treatment through trials, the company’s shares spiked 75 percent.