Some U.K.pension funds are none too happy about AstraZeneca's ($AZN) special bonus for its new CEO, Pascal Soriot. They're protesting Soriot's "golden hello"--a £4 million ($6.13 million) sign-on award designed to compensate him for bonuses sacrificed when he left Roche ($RHHBY).
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| AZ CEO Pascal Soriot |
The Local Authority Pension Fund Forum, which represents 57 public-sector pension funds, is calling on its members to oppose Soriot's compensation package at the company's annual meeting April 25, the Financial Times reports. Two major shareholders told the newspaper that they are concerned about compensation--particularly golden goodbyes and hellos--but at least one plans to vote in favor of the current compensation package.
Part of Soriot's sign-on award came in the form of 69,108 shares to vest over the next several years, 40% in October this year, another 30% in October 2014, and the remaining 30% in October 2015. The award is not subject to any performance benchmarks, according to AstraZeneca's 2012 annual report. Another stock award is subject to performance targets and four-year vesting. And to compensate for Soriot's lost cash bonus from Roche, for the first 9 months of last year, AstraZeneca paid him £991,080 (about $1.5 million), according to disclosures made in October.
The company would not comment on Soriot's pay for the FT, but told the newspaper in a statement that its compensation policy "promotes long-term, sustainable growth in shareholder value" and that it is committed to pay packages rich enough to attract and motivate high-quality top executives "while avoiding paying more than is necessary."
This debate over Soriot's pay comes on the heels of his newly unveiled plans to rejuvenate the company, with a major R&D overhaul and 5,050 job cuts. Earlier this year, Soriot showed a top executive the door and promoted several others in an org-chart overhaul. So far, however, the company has faced skepticism about its growth plans. Standard & Poor's downgraded the company's credit rating, citing worries that Soriot's plan won't jump-start sales.
It also comes at a time when executive pay is attracting heightened scrutiny, particularly in Europe. The Swiss people recently approved new restrictions on compensation, including a ban on golden parachutes, amid an outcry over a $78 million non-compete agreement Novartis had sety with Chairman Daniel Vasella. Vasella and Novartis quickly changed their minds after the agreement went public.
- read the FT story
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