AstraZeneca shareholders approve CEO Soriot’s £18.7mn pay despite revolt

AstraZeneca shareholders approved a potential £1.8mn pay rise for chief executive Pascal Soriot, despite a significant investor revolt against a pay increase advisers had called “excessive”.

Almost 36 per cent of shareholders voted against the plans, under which 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 the previous policy set in 2021. Soriot would also be in line for a bonus worth up to 300 per cent of his base salary, compared with the prior policy of 250 per cent.

The 64-year-old was handed £16.9mn last year after hitting most long-term targets, making him one of the best-paid chief executives on the blue-chip FTSE 100 index.

Shareholder adviser Glass Lewis, in a report to investors ahead of the vote, had said the raise was “excessive”. The revolt on Thursday follows a clash between investors and management over Soriot’s pay in 2021, when almost 40 per cent of shareholders opposed an increased pay package.

The voting is the latest sign of tension between UK companies attempting to compete for talent with high-paying US rivals, and shareholder bases accustomed to much lower payments for executives.

But leading shareholders welcomed the pay rise before the vote, with Rajiv Jain, chief investment officer at top-20 shareholder GQG Partners, saying Soriot was “massively underpaid” given the performance of the business under his watch.

Norges Bank, which runs Norway’s sovereign wealth fund and is a top-10 shareholder, had also disclosed it would vote in favour of the pay deal, while another top-20 active shareholder said the deal should be compared with those of US peers, where chief executives are often paid more than Soriot.

AstraZeneca has also sought to justify the changes by saying it is competing with US rivals. Like many European pharmaceutical companies, it makes a large proportion of sales in the US.

“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 said.

After the vote it said in a statement: “We will continue to engage with our shareholders and the proxy advisors to explain our need for global benchmarks and pay for performance, which is driven by the policy”.

The approval by shareholders comes after the company raised its dividend on Thursday to $3.10 a share for 2024, 20 cents above the 2023 payout.

The increase in the dividend payment is intended to compensate for the lower level of shareholder returns when set against the steady period of growth over the past five years in which shares rose 78 per cent, according to someone familiar with the plan.

AstraZeneca’s share price has fallen more than 8 per cent in the past year. The unanticipated rise in the dividend payment per share is the company’s first since an increase of 3 cents in 2022. Dividends per share had risen just 10 cents since 2011, according to data from S&P Capital IQ.

“Some of our loyal shareholders do expect cash dividends as an important part of total returns,” said AstraZeneca chair Michel Demaré at the AGM. “We have listened to them and we are yielding to their request to increase the dividend.”

Following the dividend raise, shares in the company closed 2.3 per cent higher on Thursday.