Against the wishes of a handful of investor advisory groups, AstraZeneca shareholders have approved a sweetened pay deal for CEO Pascal Soriot. But in what has been of true AZ fashion as of late, Soriot is now left to pivot to another legal challenge from the EU.
During the company’s annual shareholder meeting on Tuesday, investors approved Soriot’s latest pay package proposal with 60.19% of votes in favor, Reuters reports. The stamp of approval came despite calls from at least four proxy advisory groups—ISS, Glass Lewis, PIRC and the Investment Association—to deny Soriot of sweetened bonuses and equity, calling the increases “excessive.”
However, with investor backing now in hand, Soriot’s maximum long-term equity incentive awards will grow to 650% of his £1.33 million base salary in 2021 from the currently allowed 550%.
It will also raise his 2021 maximum annual bonus to 250%—the ceiling permitted under the existing AZ remuneration policy—from 2020’s 200%.
AstraZeneca acknowledged that a "meaningful proportion of shareholders" were against the change to directors' pay, adding that it would continue to engage with them, Reuters reports. The company had previously defended Soriot’s enhanced pay, arguing in part that its execs’ total compensation is “well behind” their peers in global and European pharmas.
An AstraZeneca representative told Fierce Pharma in an email Tuesday that the drugmaker's executives have "driven a remarkable turnaround" in its performance, bolstering shareholder returns of "close to 300% over the last eight years and 77% over the last three years."
Soriot is no stranger to investor criticism over his compensation plans. Last year, institutional investors in London revolted against the exec's pension contribution as relative to the average level among the company’s U.K. workforce. On top of that, they were unsatisfied with how the board calculated Soriot's annual bonus and, at the time, its decision to raise the long-term equity incentive awards up to 550% form 500%.
But this year’s executive compensation debate is especially noteworthy for AstraZeneca following its pandemic response. While among the first drugmakers globally to develop and deploy a vaccine, AstraZeneca has since faced a number of headaches during the shot’s rollout, which have called Soriot’s leadership into question.
Most of the setbacks have stemmed from the European Union, which has publicly feuded with the drugmaker over its lack of deliveries to the bloc on top of concerns of rare blood clots. On Monday, AstraZeneca hit a milestone of 50 million doses delivered to the EU, a benchmark the company had previously expected to hit in January.
Frustrated by the postponed deliveries, the EU first took legal action against AstraZeneca in late April for failing to cough up its promised supply of COVID-19 vaccines and for not having a “reliable” plan to ensure timely deliveries. AstraZeneca has said it'll deliver 100 million doses by the end of June, far short of the 300 million it originally committed.
Now, the EU has kicked off a second lawsuit against the company, but this time there could be financial penalties involved, Reuters reports. The bloc is pushing AstraZeneca to supply at least 120 million doses of its vaccine by the end of June, marking the first formal request from the EU during its legal proceedings.
However, an AstraZeneca lawyer maintained that the drugmaker was not obligated to deliver the entirety of doses set forth in its contract because it only committed to doing its "best reasonable efforts,” according to Reuters’ report.
For the European Commission’s part, a spokesperson said at a news conference later in the day that the lawsuits are intended to get more doses from the drugmaker rather than to punish the company or seek fines.