Like clockwork, AstraZeneca CEO Pascal Soriot’s pay is under fire again.
Two influential advisory firms, Institutional Shareholder Services and Glass Lewis, are rallying investors to vote against AZ’s 2024 pay proposal for Soriot at the company’s annual general meeting later this month.
It’s a familiar spot of controversy for the British drugmaker, which has routinely weathered pay revolts against Soriot’s compensation packages.
ISS and Glass Lewis have come out swinging against AZ’s plan to pay Soriot upward of 18.7 million pounds sterling ($23.5 million) for his performance this year, the Financial Times first reported.
AZ unveiled its 2024 pay proposal in late February, noting that Soriot could earn long-term performance incentive payments worth up to 850% of his 1.49 million pound base salary this year. To achieve the maximum possible payout, the CEO must hit multiple targets around new drug approvals, earnings per share and overall revenue, FT explained.
Under the plan, AZ’s compensation committee also pushed to increase Soriot’s maximum bonus to 300% of base pay. As it stands, Soriot’s current maximum bonus amounts to 250% of that sum.
AZ’s forward-looking pay proposal—and ISS and Glass Lewis’ ire—comes after the company awarded Soriot a total of 16.9 million pounds ($21.3 million) for his work in 2023.
In a report viewed by Fierce Pharma, Institutional Shareholder Services said Soriot’s 2023 pay was “generally in line with performance” and didn’t raise any major concerns.
That said, ISS argues that Soriot’s potential 2024 compensation increase is “unprecedented” among companies on the Financial Times Stock Exchange (FTSE)—a stock market index of highly capitalized companies on the London Stock Exchange. The proposed payout “further widens the variable pay gap with other FTSE 10 peers," ISS said in the report.
ISS acknowledged that AstraZeneca “undoubtedly has a global reach” in a “high-paying sector” with a “well-regarded CEO at the helm.” The proxy firm also said it’s aware of the wider debate around compensation standards in the U.K. versus peer companies in the U.S.
“Against this backdrop, and given the company's cogent rationale, some level of increase to remuneration may well be deemed reasonable,” ISS wrote in its report. “However, the scale of the increase remains a concern.”
Further, there is an “absence of compelling evidence that the CEO has been materially underpaid relative to peers in recent years,” Glass Lewis said, as quoted by FT.
AstraZeneca has frequently had to defend Soriot’s pay in the past, including in 2017 and 2014.
In May 2021, Glass Lewis and ISS raised similar concerns over AZ’s proposal to increase the maximum bonus and equities Soriot could earn that year, calling the proposed increase “excessive.”
Meanwhile, in 2020, institutional investors in London weighed whether to vote against Soriot’s 2019 pay package, specifically taking issue with the CEO’s pension contribution as relative to the average level among AZ’s U.K. workforce.
Despite AZ’s argument that it’s aiming to keep Soriot’s pay competitive, the CEO has consistently edged out his European peers when it comes to compensation. In 2023, for instance, Soriot’s payout of 16.9 million pounds bested pay packages for CEOs at Novartis, Roche, Novo Nordisk, Sanofi and GSK.
When AZ revealed the details of Soriot’s 2023 pay in February, the U.K.’s High Pay Centre—a think tank focused on economic inequality and pay—argued the CEO was being compensated too much.
“Pascal Soriot has consistently been one of the highest paid CEOs in the FTSE 100, getting paid around a thousand times more than a minimum wage worker and over a hundred times more than many of his own employees,” a spokesperson for the High Pay Centre told The Guardian at the time.