AstraZeneca chief suffers investor rebellion over pay
AstraZeneca chief executive Pascal Soriot has suffered a shareholder rebellion on pay after the drugmaker significantly increased his potential bonus for the second year in a row.
About 40 per cent of votes that were cast at the company’s annual general meeting went against the pay rise, with 60 per cent supporting the company’s pay policy. Just under three-quarters of shareholders voted.
Under the approved new policy, Soriot will be eligible for a bonus of up to 250 per cent of his base salary, compared with 200 per cent previously, and long-term share awards worth up to 650 per cent of his salary, up from 550 per cent.
Large shareholders Aviva and Standard Life Aberdeen voted against the proposal. Advisory groups Institutional Shareholder Services, Glass Lewis and PIRC had recommended that shareholders reject the proposal, arguing there was no reason to significantly increase variable pay again.
The vote was the latest in a series of bruising rebellions at UK companies as investors take a stand over pay.
Last week more than 60 per cent of votes cast at Rio Tinto’s annual meetings in London and Sydney went against the miner’s remuneration report, which included an exit package handed to former chief executive Jean-Sébastien Jacques.
On the same day, more than 38 per cent of shareholders voted against drugmaker Indivior’s pay report, after it maintained bonuses for its former chief executive who was jailed for his role in the US opioids crisis.
There have also been sizeable rebellions at BAE Systems, BAT and Foxtons.
AstraZeneca’s remuneration committee said the executive directors had driven a “remarkable turnround in the company’s performance”.
“Our executive directors have demonstrated solid and visionary leadership to steer the company towards delivering another outstanding performance in terms of achieving stretched financial goals, over-delivering pipeline management targets to accelerate innovation, and negotiating new partnerships with great potential,” it added.
Soriot’s total pay package for 2020 was worth £15.4m, the majority of which was based on his performance.
Since Soriot took over in 2012, he has transformed AstraZeneca’s drug pipeline, more than doubling the company’s share price. But the pharma group has been scrutinised for its work producing a non-profit Covid-19 vaccine, developed with the University of Oxford, after delays in manufacturing and concerns about a very rare side-effect.
The remuneration committee acknowledged it was “unusual” to seek approval for a revised pay policy at two consecutive AGMs and “that remuneration is a sensitive matter during this pandemic period”. But it noted that the company had played an important role in responding to Covid-19.
The committee said the previous pay policy did not reflect AstraZeneca’s position in the European pharma market, or the increased “scale and scope” of what the chief executive and chief financial officer were being asked to deliver.
At the same meeting on Tuesday, shareholders approved AstraZeneca’s $39bn takeover of Alexion Pharmaceuticals, a US biotechnology group, with more than 99 per cent of votes cast in favour. The cash-and-stock deal was the largest undertaken by a pharma company during the pandemic.
Soriot said the approval was a “significant step toward combining Alexion’s leadership in complement biology and rare diseases with AstraZeneca’s expertise in precision medicine and growing presence in immunology”.
Separately, Alexion shareholders voted in favour of the deal on Tuesday. If approved by regulators in the EU, UK and Japan, the acquisition is expected to close in the third quarter.