AstraZeneca: the new boss’s bonus agitates shareholders

The remuneration of big bosses is often debated. It is rarer for this to come directly from the shareholders of the company. Yet this is what emerges from the general assembly of AstraZeneca. If the gratification of its managing director, the French Pascal Soriot, was indeed approved, it was only done by a small majority.

Indeed, only 60% of the shareholders of the Anglo-Swedish pharmaceutical giant approved, Tuesday, the revaluation of the bonus granted to the leader. According to the new compensation plan defined by the company, Pascal Soriot will now receive an annual bonus likely to reach 2.5 times his base salary, against twice previously. To this could be added compensation in shares likely to reach 6.5 times his pay, against 5.5 times so far.

A bonus deemed excessive

As a reminder, the compensation of the Chief Executive Officer, in office since 2012, reached last year 15.4 million pounds sterling (17.9 million euros), after 15.3 million in 2019. These amounts are composed for the main part of bonuses and remuneration in long-term shares. His base salary remains set at 1.3 million pounds.

Several British companies (Rio Tinto, BAE Systems, Foxtons, etc.) have seen their shareholders rebel against the compensation programs in recent weeks. In the case of AstraZeneca, two major investors, Aviva and Standard Life Aberdeen, are among those who voted against.

In addition, investor advisory firms ISS, Glass Lewis and PIRC had all recommended a rejection of the resolution at the AGM. They considered the planned bonuses excessive.

Delivery delays and side effects

The pharmaceutical giant says it has taken note of the “significant” proportion of shareholders who have spoken out against the evolution of executive compensation. “The Board of Directors’ approach […] continues to situate [leur] remuneration well below the levels in force in the global pharmaceutical sector and does not reflect the improvement in AstraZeneca’s position on the European market ”, however specifies the laboratory.

The group’s compensation committee considers that its “directors have demonstrated solid and visionary management which has enabled AstraZeneca to deliver solid performance in terms of financial objectives, renewal of the innovation pipeline and new partnerships negotiated”. Since Pascal Soriot has been in charge, the company’s market capitalization has more than doubled, from 37 billion to 96 billion pounds.

For several weeks, AstraZeneca has, however, been under the spotlight and has experienced strong criticism from the European Union on the delays in delivery of its vaccine against Covid-19. These supply difficulties came on top of doubts about the side effects of the vaccine, after the appearance of a few cases of thrombosis in vaccinated people, and despite the approval of the European Medicines Agency in early April. This Tuesday, several Brazilian states also suspended the use of the AstraZeneca vaccine in pregnant women following a death.

The buyout of the biotech Alexion validated

AstraZeneca shareholders have approved 99.9% of the buyout of US biotech Alexion for $ 39 billion. The project announced in December is due to be finalized in the third quarter. The operation must still receive some green lights from the regulatory authorities. “This is an important step towards combining Alexion, at the forefront of biology and on rare diseases, with AstraZeneca’s expertise in precision medicine and its growing presence in immunology”, commented Pascal Soriot. .

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