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AstraZeneca's boss has criticized acting advisers for a “double standard” that is “seriously damaging” the competitiveness of British companies, after more than a third of the company's shareholders voted against a potential £1.8m pay rise for chief executive Pascal Soriot.
Influential shareholder advisers ISS and Glass Lewis have recommended that shareholders block the company's long-time CEO's pay package, with Glass Lewis saying the size of the increase in incentive-based payouts was “excessive”.
But in an article for the Financial Times, Michel Demarai said that advisers “often make inconsistent voting recommendations across markets: they advise shareholders to vote against pay policies at FTSE-listed companies, but support US and Swiss companies that typically have higher compensation levels and lower wages.” “. Performance-indexed pay score.”
He added: “We do not compare ourselves to the major companies in the FTSE index, and the narrow approach taken by proxy agencies is irrelevant to the decisions of our current and future employees.”
Although the pay deal was approved, a shareholder revolt followed a similar dispute in 2021, when advisory groups also recommended that investors block Soriot's pay package.
It illustrates the tension between British companies trying to retain and attract global talent, and shareholders accustomed to lower pay for UK executives.
Under the approved plans, Soriot could receive a maximum of £18.7m. He is entitled to annual long-term performance-based incentive payments worth up to 850 per cent of his basic salary of approximately £1.5 million, compared to the maximum of 650 per cent under the previous policy.
He is also nominated for a bonus worth up to 300 percent of his basic salary, compared to the previous rate of 250 percent, subject to achieving goals.
In recommending that investors oppose the plans, ISS said it recognizes that AstraZeneca, the UK's second-largest public company by market value, has a “global reach, operates in a high-paying sector, with a well-respected CEO at its helm”. But she added that she was still concerned about “the size of the increase.” She said Sorio's wages were already “competitive with her European peers”.
Soriot was the highest-paid FTSE CEO for the financial year ending 2022, the latest year for which figures from all companies are available. AstraZeneca has a market capitalization of £171 billion.
Although pay reporting standards vary between countries, Soriot is paid higher than the reported totals for other European pharma executives, but is paid slightly less than some of his U.S. peers.
Rajeev Jain, chief investment officer at top 20 shareholder GQG Partners, said before the vote that the Frenchman was “being paid significantly less” given the company’s performance under his watch.
ISS and Glass Lewis did not immediately respond to requests for comment.
Legal & General Investment Management, one of AstraZeneca's top ten shareholders, told the Financial Times that it had decided to support the new pay policy.
But she warned that the decision was difficult and that she “will not hesitate to vote against the pay report in the future, if we consider that his pay no longer reflects the company's performance or evolving market standards.”
She said her decision was an endorsement of Soriot and AstraZeneca's performance over the past 12 years, rather than providing support for future pay increases: “We would like to stress that we do not expect the next CEO to automatically receive the same pay package.” Like Mr. Soryu.”
