AstraZeneca shareholders urged to oppose pay plan for CEO Soriot

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favorite tales on this weekly publication.AstraZeneca’s plan to pay chief govt Pascal Soriot as much as £18.7mn has been branded “extreme” by two influential shareholder advisers, saying his remuneration was already aggressive versus worldwide friends.The drugmaker final month set out its pay proposal for Soriot, who might want to hit a collection of targets, together with for brand new drug approvals, earnings per share and whole gross sales, to obtain the utmost sum for his efficiency this yr.Since taking the helm in 2012, Soriot has turned AstraZeneca into the second-largest firm on the FTSE 100 index behind Shell. The 64-year-old was handed £16.9mn final yr after hitting most long-term targets, making him one of many best-paid CEOs on the blue-chip index. When it outlined the case for lifting his potential payout in its annual report, AstraZeneca stated the rise was “materials if seen in a UK context” however “the adjustments are crucial to extend the competitiveness” versus US and European friends.Glass Lewis and ISS, which make suggestions to shareholders on the best way to vote at annual conferences and on issues of company governance, disputed the declare and urged buyers to vote towards the plan at AstraZeneca’s annual normal assembly on April 11. Below the plan, Soriot may earn annual incentive funds based mostly on long-term efficiency value as much as 850 per cent of his nearly £1.5mn base wage, in comparison with the utmost of 650 per cent below an current coverage set in 2021. He would even be in line for a bonus value as much as 300 per cent of his base wage, in comparison with 250 per cent at current.Whereas acknowledging that AstraZeneca has “a world attain, is in a high-paying sector, with a very well-regarded CEO on the helm,” ISS stated that it remained concern by “the size of the rise”. Soriot’s remuneration was already “aggressive towards European friends”, it added in a report, a duplicate of which was seen by the Monetary Instances.In its evaluation, Glass Lewis pointed to an “absence of compelling proof that the CEO has been materially underpaid relative to friends in recent times”.Soriot already earns greater than bosses of bigger European pharmaceutical corporations. Lars Fruergaard Jørgensen, the chief govt of Novo Nordisk, Europe’s largest pharma group by market capitalisation, was paid Dkr68mn (£7.8mn) final yr.The intervention by the world’s largest proxy advisers comes as CEO pay has develop into a flashpoint within the debate over the best way to persuade extra corporations to checklist in London. Julia Hoggett, the pinnacle of the London Inventory Alternate, final yr stated that UK executives must be paid extra because the bourse battles to draw extra corporations.Soriot’s pay has beforehand proved controversial. About 40 per cent of the votes forged on the group’s annual assembly in 2021 have been towards the remuneration plan, which is ready each three years. Glass Lewis and ISS additionally advisable shareholders oppose that plan.Final yr, Michel Demaré, the chair of AstraZeneca, defended Soriot’s pay, telling the FT that it was ready to endure “main criticism” over it and that Soriot may earn extra within the US. A number of US pharma bosses are higher paid, with Dave Ricks, head of Eli Lilly, incomes $26.6mn in 2023.In recommending shareholders vote towards the brand new proposal, ISS stated it was “cognisant of the broader debate round UK remuneration requirements, within the context of FTSE corporations remaining aggressive towards US friends”.AstraZeneca stated that “the brand new coverage displays the have to be aggressive within the world marketplace for expertise and our compensation is structured to reward efficiency”. The corporate additionally pointed to whole shareholder returns that it stated had far exceeded “the common of our friends in Europe and globally”.

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