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Merck & Co.'s (MRK) leader received compensation valued at $13.3 million for 2011, up 41% from the year before, reflecting his ascension to the drug maker's top post and Merck's ability to exceed certain internal performance targets.
Kenneth Frazier, 57, became Merck's chief executive at the beginning of 2011 and chairman of the board in December. He was previously head of Merck's human health business.
In a proxy statement filed Thursday with the U.S. Securities and Exchange Commission, Merck said certain elements of Frazier's compensation reflected growth in Merck's sales and adjusted earnings for 2011.
In addition, Merck's board considered "his performance, leadership, planning and oversight during a time of continued economic, regulatory and political challenges for the healthcare industry."
Earlier this year, Frazier acknowledged that Merck had a tough 2011. The company endured setbacks including negative clinical data for a once-promising heart drug, vorapaxar. Merck's full-year stock price performance lagged behind most of its large-pharmaceutical peers.
But Merck of Whitehouse Station, N.J., continued to cut costs and was able to raise its dividend for the first time in seven years in 2011. Frazier said in January he was optimistic about 2012.
Frazier's total compensation included: $1.5 million in salary, $3.1 million in stock awards, $3 million in option awards, $3.1 million in non-equity incentive plan compensation, and $2.6 million change in pension value and non-qualified deferred compensation earnings.
In its proxy, Merck said the company exceeded internal targets for most elements of a company "scorecard" that is used partly to determine executive compensation. Merck exceeded targets for financial outcomes, customer outcomes and "internal business drivers."
However, Merck didn't earn any scorecard points for "people and culture." This element of the scorecard reflects Merck's ability to create "a high-performance, sustainable culture as measured by the results of our annual employee culture survey," the proxy said.
Based on results of the employee survey, "the Company failed to score any points in this category," the company said. "To earn points, some improvement over 2010 scores was required. In a year of significant transformation, restructuring and change for our employees, scores decreased slightly on the areas of focus."
-By Peter Loftus, Dow Jones Newswires; +1-215-982-5581; email@example.com