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AstraZeneca's chief executive, Pascal Soriot, is on extremely low pay and is entitled to a proposed pay rise of £1.8m, according to a major shareholder in the pharmaceutical company.
The British pharmaceutical company is preparing to vote on the pay of its long-serving leader at its annual meeting on Thursday, including a rise that would take his total pay to a maximum of £18.7 million. Influential shareholder advisors Glass Lewis and ISS have recommended investors vote against the company's pay policy.
But Rajeev Jain, chief investment officer at Florida-based GQG Partners, said Soriot received more than the extra pay because of the company's strong performance.
“There is a compensation issue at AstraZeneca,” Jain, a top 20 shareholder, told the Financial Times. “The CEO is extremely underpaid… given the impressive turnaround AstraZeneca has achieved since he joined more than a decade ago.
Defending Sorio's pay raises the possibility of a split among major shareholders as they vote on a new deal. Norges Bank Investment Management, which manages Norway's sovereign wealth fund and is a top 10 shareholder, also revealed it would vote in favor of Soriot's pay increase.
Glass Lewis described the increases in Soriot's performance-related pay package as “excessive”. Soriot is already among the highest-paid bosses in the FTSE with a deal worth £16.9m in 2023, taking home more than the chief executives of rival European pharmaceutical companies.
Lars Frørgaard Jørgensen, chief executive of Novo Nordisk, Europe's largest pharmaceutical group by market value, earned DKK68m (£7.8m) last year. Emma Walmsley, CEO of AstraZeneca's British rival GSK, received £12.7 million in 2023.
Under the new plan, Soryu could receive annual long-term performance-based incentive payments worth up to 850 per cent of his basic salary of approximately £1.5m.
This compares to the cap of 650 per cent under the current policy set in 2021. He will also receive a bonus of up to 300 per cent of his basic salary, compared to 250 per cent at present.
AstraZeneca generates 40 percent of its sales in the United States, like many European pharmaceutical companies, and has sought to justify the increases by comparing Soriot's wages with those of American pharmaceutical companies. The CEOs of AbbVie, Eli Lilly and Johnson & Johnson earned more than Soriot in 2023.
The controversy over Sorio's pay also comes as the UK seeks to encourage more companies to remain listed in London amid a global battle for talent.
Other FTSE 100 companies, including London Stock Exchange Group, are seeking shareholder support to increase UK executive pay by benchmarking them against their US counterparts. Meanwhile, medical device company Smith & Nephew wants to increase the pay of its US executives to bring them closer to US levels.
Soriot's new pay deal comes after the company achieved a $45 billion sales target in 2023 set by the CEO in 2014, when the company fended off a takeover bid from US rival Pfizer.
Pointing to increases in AstraZeneca's R&D budget under Soryu, the successful launch of several blockbuster drugs and the expansion of the business to include rare diseases, vaccines and immunology, Jain said: “I see he should be paid more, not less. . . . We don't have a problem with him.” When does the CEO receive appropriate compensation? [they are] Delivery results.”
Soriot's pay package has proven to be a turnoff for investors in the past. In 2021 — the last time the long-term incentive policy was reviewed — nearly 40 percent of votes were cast against it, and Glass Lewis and ISS also opposed the plan.
Michel Demarai, the head of AstraZeneca, told the Financial Times last year that the company was willing to take “significant criticism” over his salary package in order to retain Soriot.
Commenting on the latest plan, Glass-Lewis said there was “an absence of compelling evidence that the CEO has been paid significantly less than his peers in recent years.”
“The new policy reflects the need to be competitive in the global marketplace for talent, and our compensation is designed to reward performance,” AstraZeneca said. The company added that shareholder returns in recent years have exceeded their counterparts in Europe and the world.
