|AstraZeneca CEO Pascal Soriot|
AstraZeneca ($AZN) CEO Pascal Soriot got a bit of a pay raise last year, with a 3% bump to his base salary. His bonus jumped, too, putting his salary, bonus and cash benefits at £3.5 million. But Soriot's real boost came in the form of equity that won't pay off for a few years: Some £4.8 million in shares, under the company's long-term incentive plan.
That put Soriot's total score at about £8.3 million, even if he can't collect on more than half of it until long-term goals are met. That's $12.46 million.
And AstraZeneca apparently was listening when investors beefed about its pay plans--at least somewhat. Shareholders last year called for executive bonuses and long-term incentive pay to be tied to the lofty revenue targets Soriot set when defending his company against a Pfizer ($PFE) takeover. The company didn't change its long-term incentive plans, but did unveil some details about those performance goals, both for Soriot and for his CFO, Marc Dunoyer.
Earlier this month, John Varley, chairman of the board's remuneration committee, was said to be chatting up critical shareholders about the company's compensation plans. In the annual report, Varley defended current benchmarks as "directly aligned" to the company's pipeline and commercial progress. And those, in turn, "are projected to deliver the company's longer term goals, including the 2023 $45 billion revenue target," Varley wrote in AstraZeneca's annual report.
Just what are those goals? There are the usual financial targets--earnings and revenue--plus pipeline-related measures such as regulatory submissions and partnering deals, which the company either met or beat. Performance on AZ's commercial goals wasn't as positive; though the company didn't disclose exact numbers on sales goals--deeming them "commercially sensitive till March 2017"--it did admit to falling short on Brilinta sales, which came in at $476 million, and on Japanese revenue. Diabetes and emerging markets hit their targets--and the respiratory franchise beat its numbers, with $4.75 billion in sales.
Soriot's long-term incentive award for 2015 came in at 285% of his base salary. The sizable grant was partly prompted by comparisons of Soriot's pay package to peers in the U.K. and pharma peers in the U.S., according to Varley. "We believe it is strongly in the interests of shareholders that Mr. Soriot's compensation opportunity is both competitive and motivational," Varley wrote in AstraZeneca's annual report.
The breakdown on Soriot's pay is £1.133 million in base salary, £1.926 million in bonus pay, plus £108 million in benefits and £340 million in a pension allowance; Soriot collects the latter in cash up front, save £6 million or so.
- read the AZ annual report (PDF)
Special Reports: The 15 highest-paid biopharma CEOs of 2013