AstraZeneca CEO Gets £19M Amid Investor Split

Key Takeaway

• AstraZeneca shareholders approve CEO Pascal Soriot's pay rise to £19 million, up from £16.8 million, amid investor divide.
• Soriot's compensation includes potential bonuses up to 300% of base salary; a significant increase reflecting his impact on the company’s growth.
• Despite advisory firms' opposition due to deviation from UK norms, some top investors argue Soriot is "massively underpaid" compared to peers.

Shareholder Approval

AstraZeneca Plc, under the leadership of CEO Pascal Soriot, received a significant nod from its shareholders, with about two-thirds voting in favor of a new compensation policy. This policy could see Soriot's maximum annual pay rise to nearly £19 million ($23.8 million) from the previous £16.8 million. This decision comes despite Soriot being the highest-paid chief executive in the UK's FTSE 100 stock index. The approval marks a shift from 2021, where nearly 40% of investors opposed the remuneration policy. Soriot has been instrumental in AstraZeneca's growth, particularly in the oncology sector, leading to a 275% stock increase since his tenure began in 2012.

Compensation Details

The approved compensation package includes an increase in Soriot’s long-term incentive share plan to 850% of his base salary, up from 650%. Additionally, his potential annual bonus could rise to a maximum of 300% of his base salary, compared to the previous 250%. This potential payout structure is unprecedented in the UK, as noted by Institutional Shareholder Services Inc. (ISS) and Glass Lewis, both of whom advised against the policy due to the significant deviation from the norm in large FTSE companies.

Investor Perspectives

Despite the controversy, some investors have voiced strong support for Soriot's proposed pay increase. Rajiv Jain, chief investment officer of GQG Partners and one of AstraZeneca's top 20 shareholders, described Soriot as “massively underpaid” in light of the company's turnaround and success in the pharmaceutical industry. This perspective highlights a divide in investor sentiment, with some viewing the pay increase as justified by Soriot's performance and AstraZeneca's comparative analysis with other pharmaceutical giants like Eli Lilly & Co. and Johnson & Johnson, whose CEOs earned $26.6 million and $21.6 million, respectively, in 2023.

Street Views

• Institutional Shareholder Services Inc. (Neutral on AstraZeneca's compensation policy):

  "The scale of the increase was the main concern, as it significantly deviated from other large FTSE companies."

• Glass Lewis (Neutral on AstraZeneca's compensation policy):

  "It remained unconvinced that increases of this scale are justified at this time."

• Rajiv Jain, GQG Partners (Bullish on Pascal Soriot's performance at AstraZeneca):

  "Soriot is massively underpaid... pointed to Astra’s impressive turnaround under Soriot."