Philips CEO pay dropped as Respironics recall fallout continued

A photo of Philips Chair and CEO Roy Jakobs

Philips Chair and CEO Roy Jakobs [Photo courtesy of Philips]

Philips reported lower pay for Chair and CEO Roy Jakobs and another top executive in 2024 along with severance for its former chief financial officer as the medical device manufacturer’s revenue slipped amid continued fallout from its Respironics recalls.

Recruiting and retaining top talent — both at the executive and engineering level — is crucial in the medtech industry, but employee compensation is kept secret in most cases. Medical Design & Outsourcing tracks and analyzes these pay figures when disclosed by major device developers and manufacturers.

Philips is the world’s sixth-largest medical device company, according to our 2024 Medtech Big 100 ranking. That ranking was based on the company’s 2023 revenue of $19.6 billion. The Amsterdam-based company’s sales decreased to $19.5 billion in 2024. (These amounts and the compensation figures below have been converted from euros to U.S. dollars.)

That’s a year-over year decrease of 0.8%, though the company reported 2024 sales growth of 1% on a comparable basis.

“Within a persistently challenging macro environment, our focus remains on executing our value creation plan, bringing industry-leading innovations to the market and driving a simplified, more agile operating model,” Jakobs said in an announcement of the full-year results in February, shortly after finalizing $1.1 billion worth of settlements for the recalls.

“We strengthened our team and culture of impact with care, with patient safety and quality as our number one priority,” he continued. “Looking ahead, we remain confident in our long-term plan and will continue to work closely with customers as we build on our strong innovation pipeline and focus on execution excellence to drive profitable growth.”

Philips executive pay

A photo of Philips EVP and Chief ESG and Legal Officer Marnix van Ginneken.

Philips EVP and Chief ESG and Legal Officer Marnix van Ginneken [Photo courtesy of Philips]

Philips paid Jakobs $4.4 million in total compensation in 2024, according to the company’s latest management pay disclosure. That included $1.3 million in base pay, a performance bonus worth about $965,000, $1.8 million worth of performance shares, about $320,000 worth of pension allowances and costs, and other compensation worth about $87,000.

Jakobs’ total compensation decreased 1% when compared in euros, or nearly 13% in U.S. dollars when calculated using the exchange rate at the end of both years.

Philips also reported a decrease in pay for EVP and Chief ESG and Legal Officer Marnix van Ginneken, whose total compensation was $2.1 million in 2024. That included about $679,000 in base pay, a performance bonus worth about $440,000, about $770,000 worth of performance shares, about $167,000 worth of pension allowances and costs, and other compensation worth about $77,000.

A photo of Philips EVP and CFO Charlotte Hanneman.

Philips EVP and CFO Charlotte Hanneman [Photo courtesy of Philips]

Total compensation for van Ginneken decreased 11% year-over-year in euros, or 16% in U.S. dollars.

Philips reported nearly $463,000 in total compensation for new EVP and CFO Charlotte Hanneman, who joined the company on June 1, 2024, from Stryker, where she served as controller and head of financial planning and analysis.

She replaced retired CFO Abhijit Bhattacharya on Oct. 1, 2024. Philips disclosed nearly $3.7 million in total compensation for him in his final year (up 17% year-over-year when compared in euros), including a one-time severance payment worth about $874,000.

A photo of former Philips CFO Abhijit Bhattacharya.

Former Philips CFO Abhijit Bhattacharya [Photo courtesy of Philips]

“Despite declines in demand in both consumer and health systems in China we returned to positive order growth and continued to drive margin expansion and cash-flow generation,” Philips Remuneration Committee Paul Stoffels wrote in the executive pay disclosure. “Nearing the end of the second year of the three-year plan to create value with sustainable impact, Philips has made solid progress on its execution priorities, returned to order intake growth, and delivered strong margin and good cash performance, although sales growth was slower. Philips reached important milestones in the Respironics litigation, resolving the personal injury litigation and the medical monitoring class action. We believe this progress is being acknowledged, where long-term investor Exor increased its stake in Philips, along with some other significant investors.”

Philips average worker pay and CEO pay ratio

Philips also reports average employee compensation and compares its against the CEO’s pay, saying “this disclosure enhances transparency in income distribution and aligns with our commitment to fair remuneration practices.”

Unlike publicly traded companies in the U.S. that must report this CEO pay ratio as calculated using compensation for its median employee, Philips determines average employee renumeration costs by dividing its total employee benefit costs by its average number of employees.

That figure came out to about $103,000 for 2024, down less than 1% year-over-year in euros and down 7% when converted to U.S. dollars.

Philips says the gap between average worker pay and CEO pay has been closing in recent years, shrinking from 67:1 in 2020 to 63:1 in 2021, 55:1 in 2022, 46:1 in 2023 and 43:1 in 2024.

However, Philips said in a footnote that “the ratio will increase when financial performance is strong and conversely decrease when financial performance is not as strong.”

“The remuneration of the CEO is more heavily dependent on variable compensation than the remuneration of the typical employee at Philips,” the company explained in a footnote. “Furthermore, the costs of performance shares are based on accounting standards (IFRS) and the specific allocation of these costs to the year. As such, the total remuneration level and costs applicable to the CEO will vary more with Philips’ financial performance than the remuneration level and costs applicable to the typical employee.”

Investors overwhelmingly approved the company’s compensation practices at the annual meeting in May.