Patrick E. Burnett
About Patrick E. Burnett
Patrick E. Burnett, M.D., Ph.D., age 53, is Executive Vice President and Chief Medical Officer (EVP, CMO) of Arcutis (promoted December 1, 2024; joined as SVP & CMO in August 2020). He is a board‐certified dermatologist; prior roles include CMO at Verrica, AVP Clinical Development at Sun Pharma (dermatology and rheumatology pipeline), Global Program Medical Director at Novartis, and Assistant Professor of Dermatology at Vanderbilt. He holds an M.D. and Ph.D. in neuroscience from Johns Hopkins School of Medicine and a B.S. in Biology and Biochemistry from the University of Iowa . In 2024 the company achieved 128% of corporate performance goals (driven by ZORYVE revenue, commercialization, pipeline, and BD/finance objectives), and the Pay‑vs‑Performance disclosure shows a 2024 TSR value of $63.90 on a $100 IPO‑date base and net income of $(140.0) million, illustrating share‑price sensitivity of realized pay .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Verrica Pharmaceuticals | Chief Medical Officer | Apr 2018 – Aug 2020 | Senior clinical leadership for development; transitioned to Arcutis as CMO in Aug 2020 . |
| Sun Pharmaceuticals | Associate Vice President, Clinical Development | Sep 2015 – Mar 2018 | Oversight of dermatology and rheumatology pipeline . |
| Novartis | Global Program Medical Director | 2010 – Aug 2015 | Global program leadership in development . |
| Vanderbilt University Medical Center | Assistant Professor of Dermatology | 2004 – 2010 | Academic clinical/research role; board‑certified dermatologist . |
External Roles
- No current public company directorships or committee roles disclosed for Dr. Burnett .
Fixed Compensation
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Salary ($) | 457,167 | 477,267 | 504,203 |
| Ending base salary ($, YE) | — | 480,720 | 535,000 |
| Target bonus (% of base) | — | 45% | 45% through Nov 30; 50% effective Dec 1, 2024 |
| Actual cash bonus ($) | 210,297 | 230,878 | 293,274 |
Notes:
- 2024 bonus mechanics reflect a 128% corporate goal score applied to salary segments at the 45% and 50% targets, yielding 58% of salary and $293,274 for Dr. Burnett .
Performance Compensation
Annual Cash Incentive (2024 structure and outcomes)
| Metric category | Weight | Target | Outcome | Contribution |
|---|---|---|---|---|
| ZORYVE Revenue | 40% | Corporate plan | 54% of target | 21.6 pts |
| ZORYVE Commercialization | 10% | Launch/access targets | 9% of target | 0.9 pts |
| Follow‑On Indications | 20% | Regulatory filings/approvals | 30% of target | 6.0 pts |
| Advance the Pipeline | 10% | ARQ‑234, ARQ‑255 milestones | 10% of target | 1.0 pts |
| Business Development | 10% | Japan partnership, co‑promote | 10% of target | 1.0 pts |
| Finance/Corporate | 10% | Balance sheet, OpEx, cyber, turnover | 15% of target | 1.5 pts |
| Total corporate score | 100% | 128% | 128% | |
| Burnett 2024 bonus | 45% → 50% target per promotion | 58% of salary; $293,274 | $293,274 |
Long‑Term Equity Awards (2024 grants and terms)
| Grant type | Grant date | Quantity | Price/terms | Vesting policy |
|---|---|---|---|---|
| Stock options | Jan 12, 2024 | 276,000 | $3.64 strike; grant date FV $709,001 | Options generally vest over 4 years, monthly/annually as per plan . |
| RSUs (annual) | Jan 12, 2024 | 28,000 | — | RSUs generally vest over 4 years, annual tranches . |
| Option exchange → Replacement RSUs | Feb 13, 2024 | 451,700 options exchanged for 189,050 RSUs | One‑time option exchange program | RSUs generally vest over 4 years . |
Timing/insider safeguards: The company discloses timing‑of‑grants analysis around MNPI; Jan 12, 2024 options priced at $3.64 with disclosed % price change context .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial ownership (Apr 15, 2025) | 23,885 shares (less than 1% of outstanding 119,199,222) . |
| Composition (within 60 days) | 17,417 options exercisable; 6,468 RSUs scheduled to vest . |
| Ownership guidelines | Stock ownership guidelines apply to senior executives; policy in place (no individual status disclosed) . |
| Hedging/pledging | Prohibited for employees/officers/directors; no pledging absent compliance officer approval . |
| Clawback | Policy compliant with Exchange Act Section 10D and Nasdaq rules; applies to incentive comp tied to financial reporting measures . |
Employment Terms
| Term | Key provisions |
|---|---|
| Employment agreement | Executive employment agreement entered July 2020; joined Aug 2020; travel/housing reimbursement up to $5,000/month to attend corporate HQ . |
| Role changes | Promoted to EVP & CMO effective December 1, 2024 . |
| Severance (non‑CIC) | 9 months base salary continuation and up to 9 months COBRA reimbursements, subject to release . |
| Severance (CIC window) | If terminated without cause or resigns for good reason within 3 months before or 18 months after a change‑in‑control: 12 months base salary + 100% target annual bonus, 12 months COBRA, and full acceleration of unvested time‑based equity and performance‑based RSUs granted Aug 3, 2020, subject to release . |
| 280G excise | Modified cutback to maximize after‑tax value . |
Estimated value of potential payments (as of 12/31/2024; stock price $13.93):
| Scenario | Salary continuation ($) | Bonus ($) | COBRA est. ($) | Equity acceleration est. ($) | Total |
|---|---|---|---|---|---|
| Non‑CIC qualifying termination | 401,250 | — | 28,050 | — | 429,300 |
| CIC qualifying termination | 535,000 | 267,500 | 37,400 | 4,156,545 | 4,996,445 |
Performance & Track Record
| Indicator | 2022 | 2023 | 2024 |
|---|---|---|---|
| Corporate bonus score (% of target) | — | — | 128% |
| TSR – value of initial $100 from IPO | 67.89 | 14.82 | 63.90 |
| Net income ($) | (311,458,000) | (262,140,000) | (140,039,000) |
Additional governance/performance context:
- 2024 Say‑on‑Pay approval ~68% (lower vs prior years), driven in part by the option exchange; no fundamental program changes implemented in response .
- Compensation program emphasizes variable/at‑risk pay; no tax gross‑ups; change‑in‑control severance is double‑trigger; independent compensation consultant (Pay Governance) advises the Compensation Committee .
Compensation Structure Analysis
- Mix and shifts: Dr. Burnett’s 2024 package shows increased cash target (bonus target raised from 45% to 50% with promotion), plus meaningful equity via options, RSUs, and a one‑time option‑for‑RSU exchange (451,700 options → 189,050 RSUs). The exchange shifts risk from option leverage to time‑vested RSUs, improving retention but potentially reducing performance leverage for that portion of equity .
- Pay for performance: Annual bonus tied entirely to corporate goals yielded a 58%‑of‑salary payout on a 128% corporate score, tightly coupling cash incentives to operational milestones (revenue, launches, regulatory, pipeline, BD, finance) .
- Governance safeguards: Double‑trigger CIC vesting, clawback, and anti‑hedging/pledging policies are in place; no tax gross‑ups; Compensation Committee independence and external adviser support .
Risk Indicators & Red Flags
- Say‑on‑Pay softness: ~68% support in 2024 linked to the option exchange; management engaged investors and characterized the program as a one‑time event .
- Equity overhang/overhang optics: One‑time option exchange and large RSU replacements increase scheduled time‑based vesting, which can create incremental selling pressure as vesting occurs, though policy prohibits hedging/pledging .
- CIC economics: Equity acceleration under CIC can be sizable ($4.16M estimated for Burnett as of 12/31/24), raising potential transaction‑related dilution but aligned with double‑trigger market norms .
Compensation Committee & Peer Practices
- Compensation Committee: Bhaskar Chaudhuri (Chair), Patrick Heron, Keith Leonard; all independent; Pay Governance retained as independent consultant; annual risk and pay‑equity assessments conducted .
Investment Implications
- Alignment: Burnett’s incentives are predominantly at‑risk via equity and corporate‑goal bonus structure; ownership guidelines and anti‑hedging/pledging strengthen alignment, and clawback coverage adds accountability .
- Retention vs. performance leverage: The 2024 option exchange increased time‑based RSUs, enhancing retention but reducing convexity vs. options for that tranche—expect steadier vest‑driven compensation rather than high option upside unless new performance‑based awards are emphasized .
- Change‑in‑control dynamics: Double‑trigger with full time‑based equity acceleration and estimated $5.0M package at 12/31/24 implies strong retention in strategic scenarios but meaningful dilution/cost if a transaction occurs .
- Execution signal: 2024 corporate score at 128% and bonus outcomes indicate management met or exceeded operational milestones (revenue, launches, regulatory/pipeline, BD, finance), a positive execution marker for the CMO’s remit; however, TSR remains volatile and drives realized pay variability .