Pershing Square Activist Presentation Deck
Incentives Matter
Poorly Designed R&D Reinvestment Compensation Target
Allergan Management Annual Bonus Targets (March 26, 2014 Proxy)
Threshold
Target
Maximum
Adjusted earnings per
share
Sales revenue growth
in local currency
R&D reinvestment rate
(of annual sales)
$4.53
5.0%
$4.76
12.7%
► The R&D target rewards Allergan executives for R&D spending
irrespective of the returns on that investment
15.7%
16.9%
David Pyott is eligible to receive a bonus up to 25% of his base salary
if the company exceeds its annual R&D spending target
By contrast, at Merck, management is compensated for achieving
pipeline ROI and NPV goals
70
David Pyott, Allergan Chairman and CEO; Q3 2009 Earnings Call:
"Of course, R&D is not about the expenditure but it is about
results."
$4.91
18.8%
17.9%View entire presentation