AstraZeneca’s Soriot ‘massively underpaid’ at £16.9mn, top shareholder says

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AstraZeneca’s chief executive Pascal Soriot is “massively underpaid” and deserves a proposed £1.8mn pay rise, according to one of the drugmaker’s top shareholders.

The British pharmaceutical company is preparing for a vote on its long-serving leader’s pay at the annual meeting on Thursday, including a rise that would take his package to a maximum of £18.7mn. Influential shareholder advisers Glass Lewis and ISS have recommended investors vote against the company pay policy.

But Rajiv Jain, chief investment officer of Florida-based GQG Partners, said Soriot had more than earned the additional 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 massively underpaid . . . given AstraZeneca’s impressive turnaround since he joined more than a decade ago.”

The defence of Soriot’s pay raises the prospect of a split among key shareholders as they vote on a new deal. Norges Bank Investment Management, which runs Norway’s sovereign wealth fund and is a top-10 shareholder, has also disclosed that it will vote in favour of increasing Soriot’s pay.

Glass Lewis branded increases to Soriot’s performance-linked pay package “excessive”. Soriot is already among the highest paid bosses in the FTSE with a £16.9mn deal in 2023, and takes home more than the chief executives of European pharmaceutical rivals.

Lars Fruergaard Jørgensen, chief executive of Novo Nordisk, Europe’s largest pharma group by market capitalisation, was paid DKr68mn (£7.8mn) last year. Emma Walmsley, chief executive of AstraZeneca’s British rival GSK, earned £12.7mn in 2023.

Under the new plan, Soriot could earn annual incentive payments based on long-term performance worth up to 850 per cent of his almost £1.5mn base salary.

This compares with the maximum of 650 per cent under an existing policy set in 2021. He would also be in line for a bonus worth up to 300 per cent of his base salary, compared with 250 per cent at present.

AstraZeneca makes 40 per cent of its sales in the US, like many European pharmaceutical companies, and it has sought to justify the increases by comparing Soriot’s pay with US pharma bosses. Chief executives at AbbVie, Eli Lilly, and Johnson & Johnson all earned more than Soriot in 2023.

The controversy over Soriot’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 the London Stock Exchange Group, are seeking shareholder backing to increase pay for UK executives by benchmarking them against US peers. Meanwhile, medical devices company Smith & Nephew wants to increase pay for its US executives to bring it closer to American levels.

Soriot’s new pay deal comes after the company hit a $45bn sales target in 2023 that the chief executive had set in 2014, when the company fended off a takeover bid from US rival Pfizer.

Pointing to increases in AstraZeneca’s research and development budget under Soriot, the successful launch of many blockbuster drugs and the expansion of the business into rare diseases, vaccines and immunology, Jain said: “I’d argue he should be paid more, not less . . . we have no issue with a CEO receiving proper compensation when [they are] delivering results.”

Soriot’s pay package has proved a lightning rod for investors in the past. In 2021 — the last time the long-term incentives policy was reviewed — almost 40 per cent of votes were cast against it, and Glass Lewis and ISS also opposed the plan.

AstraZeneca’s chair Michel Demaré told the FT last year that the company was prepared to endure “major criticism” over his pay package in order to keep hold of Soriot.

Commenting on the latest plan, Glass Lewis said there was an “absence of compelling evidence that the CEO has been materially underpaid relative to peers in recent years”.

AstraZeneca said: “The new policy reflects the need to be competitive in the global market for talent and our compensation is structured to reward performance.” The company added that its shareholder returns in recent years had outpaced peers in Europe and globally.

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