Regeneron Pharmaceuticals, Inc. has disclosed the terms of a one-time, 10-year equity award for its co-founders, Leonard S. Schleifer, M.D., Ph.D., and George D. Yancopoulos, M.D., Ph.D. The awards, referred to as 2026 Performance Share Units (PSUs), were granted on September 24, 2026, and replace the company's standard annual equity grants for the executives until 2036. The compensation was approved by the independent members of the Board's Compensation Committee following a multi-year process that included feedback from major investors.
The awards are designed to incentivize long-term value creation, with performance goals tied to the filing of new drug applications and the generation of new product revenues. The maximum earnout requires the company to generate nearly $30 billion in annual new product revenues, which is approximately double Regeneron's total 2025 revenues. The PSUs are split into two categories: Activity-Based PSUs, which reward the filing of Biologics License Applications (BLAs) or New Drug Applications (NDAs) and FDA approvals; and Revenue-Based PSUs, which reward the actual sales generated from these new products.
The structure of the awards includes specific caps and limitations. Activity-Based PSUs are capped at 100,000 for the CEO and 300,000 for the CSO if new product revenues fall below $10 billion. If revenues exceed $10 billion but remain below $30 billion, Activity-Based PSUs are limited to 30% of the total award pool. The maximum total award for the CEO is capped at 2,700,000 PSUs, while the CSO is capped at 2,900,000 PSUs. Additionally, a relative Total Shareholder Return (TSR) modifier adjusts the earned units by up to 20% based on Regeneron's performance against the NASDAQ Biotechnology Total Return Index over the 10-year period.
Delivery of the shares is strictly staggered to promote sustained performance. No revenue-based PSUs can be earned before 2032, and there are cumulative caps on earnout through 2033. Furthermore, any shares delivered before the end of the performance period in 2035 are subject to a mandatory holding period until February 2036, with a 20% holdback pending the final TSR adjustment. The executives must remain continuously employed through the end of the performance period in 2035 to earn the full award, though they may serve on the Board. Voluntary departure or retirement prior to this date results in the forfeiture of unvested units.
In other business news, Regeneron recently formed a new subsidiary to explore a potential non-core business opportunity. The company is majority-owned and controlled by Regeneron, has nominal value, and has not yet commenced operations. Drs. Schleifer and Yancopoulos each received an equity stake in this new entity, a portion of which is subject to vesting. The details of this restricted stock purchase agreement are expected to be filed in the company's Quarterly Report on Form 10-Q for the period ending September 30, 2026.
