Amgen Chief Generates $37 Million in Profit

Gordon Binder, chairman and chief executive of Amgen, generated $37.4 million in paper profits by exercising company stock options last year.

The option transactions, disclosed in a proxy statement filed with the Securities and Exchange Commission, dwarfed the $1.77 million in cash compensation that Amgen paid the 63-year-old CEO in 1998.

Stock options have become a common part of many pay packages, and they can provide large payouts for corporate executives.

Binder got additional options last year to purchase 320,000 common shares at $32.75 each over a seven-year period. The option award would generate profits of $9.9 million if Amgen shares increase 10% annually during the exercise period.

Amgen’s shares got a big boost in December when the company won rights to produce a version of the popular anemia drug EPO in an arbitration fight with Johnson & Johnson. EPO, or recombinant human erythropoietin, is used to rebuild red blood cells depleted in procedures such as kidney dialysis.

In its proxy statement, Amgen said the company last year put in place a “golden parachute” plan that would provide cash payouts to executives if they lose their jobs after a takeover. Amgen said its plan covers about 790 officers and key employees, including Binder, and would provide as much as three times an executive’s annual salary, plus a bonus, accelerated vesting of options and continued insurance benefits.