IMS Health Pays Its CEO More Than IBM's to Keep Him From Leavingby
Bousbib's $34.8 million beat Rometty's $19.3 million for 2014
Pay seen as `unusually high number' for company that size
IMS Health Holdings Inc. is paying up to make sure Chief Executive Officer Ari Bousbib won’t depart to a bigger rival of the data-services firm. The price tag for 2015: $34.8 million.
Bousbib’s compensation for last year, disclosed in a proxy filing this week, is more than five times the median pay package awarded in 2014 to CEOs in the Danbury, Connecticut-based company’s self-identified peer group. Raymond McDaniel of Moody’s Corp., the second-highest-paid boss in the group, received $14.1 million that year.
The board set Bousbib’s pay after considering practices at “significantly larger companies” that may be “realistic competitors” for his services, according to the proxy, filed Feb. 22. Two competitors it identified in another filing are Accenture Plc and International Business Machines Corp. Accenture paid CEO Pierre Nanterme $15.9 million for 2014, while IBM gave Ginni Rometty $19.3 million. Both companies, which also provide data services to health-care clients, have market valuations more than seven times IMS Health’s $8.5 billion. Neither is in IMS Health’s self-identified compensation peer group.
“There are many ways to justify a large package, and companies will use what’s necessary to justify it as best they can,” said Charles Elson, a finance professor at the University of Delaware. Bousbib’s $34.8 million is an “unusually high number for a company of that size, and one I’m sure will attract investor attention.”
Tor Constantino, a spokesman for IMS Health, declined to comment on Bousbib’s pay beyond the filing and said members of the board’s compensation committee and the CEO weren’t available for interviews.
IMS Health shares have gained 30 percent since the firm’s initial public offering in April 2014, compared with a 2.2 percent advance in the Standard & Poor’s 500 Index.
Boards survey compensation at competing companies, typically those with revenue and market value less than two times their own, to help determine how much to pay their executives. If directors select larger businesses, they risk drawing fire from investors and proxy advisers for cherry-picking companies to justify larger pay packages.
Bousbib’s 2015 pay included a $25.6 million restricted-stock grant approved by the board after its survey showed that about 90 percent of equity units awarded to Bousbib in prior years would be vested by early 2016. That would have provided him “less of a financial incentive to stay in the face of a potential higher offer,” according to the filing. A bigger company could offer “more prestige and higher compensation,” IMS Health said.
Half of the new grant will vest in 2017 and the remaining shares vest in 2019. The pay also included $1.6 million in salary, a $5 million cash bonus and $2 million in stock appreciation rights.
Bousbib, 54, is a former executive vice president at United Technologies Corp. and partner at Booz Allen Hamilton Inc. He was recruited by IMS Health in 2010 and helped take the company public. He received $25.9 million in total compensation that year, more than three times the median pay given to CEOs in the company’s peer group, according to data compiled by Bloomberg.
In last year’s proxy filing, the board said it looked at CEO pay at public companies outside its peer group, including businesses in the S&P 500 that might compete for Bousbib’s services.