The decision to take AstraZeneca to the front lines of developing vaccines and drugs against COVID-19 has earned the British pharma global recognition—and CEO Pascal Soriot a big thank-you note.
AstraZeneca is handing Soriot £15.45 million ($21.52 million) in pay for delivering on financial and scientific goals in “extremely challenging circumstances” and for his “inspiring leadership” in the company’s COVID-19 response, AZ’s board said in its annual report (PDF).
That’s £140,000 more than his 2019 take-home pay, adjusted for recent share prices, and £4.05 million of it stemmed from stock gains that pumped up the value of his long-term equity pay.
The total covers Soriot’s salary and bonus for 2020, plus the payouts from 2018 equity awards that depended on AZ's performance in the years since. It's a number called “realized pay”—versus cash and new equity grants Soriot won for 2020 proper, which totaled £11.47 million.
Of Soriot’s total realized compensation, £1.29 million came from base salary, which remained unchanged compared with 2019. His annual bonus jumped to £2.32 million, or 90% of the maximum allowed, a mark that’s twice his base pay. Half of that bonus won’t be cashed out immediately but will be transferred into AZ shares over three years.
In explaining the value of his current payout, the board said AZ attained “overachievement in each and every three-year target.” The company delivered a total shareholder return of 77% during the period, above the average of its global pharma peers, European pharma peers and FTSE 100 comparators.
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Taking the lead in developing COVID-19 vaccine and therapeutics—both of which are new fields for AZ—sure helped boost the company’s share price in the past year, although recent questions about its University of Oxford-partnered COVID-19 shot’s efficacy and manufacturing delays have turned its stock southward.
The pandemic did cause some damage to AZ’s financial performance. On company revenue, which weighs in at 30% on the performance scorecard used to award bonuses, AZ came up short at $25.99 billion for 2020, below the board’s original target of $26.8 billion, making it the only metric that AZ undershot.
After accounting for other performance measures, including pipeline progression, regulatory milestones, cash flow and core earnings per share, Soriot would have scored 126% of his target bonus. But the board figured some pandemic-related extra credit was warranted.
The company’s Oxford-partnered COVID-19 vaccine AZD1222 is now authorized in the U.K., EU and Australia, and it’s under regulatory review in several other territories, with the goal to deliver up to 3 billion doses worldwide. Soriot has said the company will not profit from the vaccine during the pandemic.
AZ’s board also thanked Soriot for staying active outside the company during the COVID-19 fight, pointing to his influencing other key healthcare players and attending more than 50 meetings with senior-level government officials around the world.
“These interactions continue to shape the external environment and materially contribute to AstraZeneca’s success around the world,” the board said. “They were also instrumental in securing agreements for the development, production and delivery of the vaccine.”
The $39 billion acquisition of Alexion—the largest biopharma takeover unveiled in 2020—was listed as an extra credit item for Chief Financial Officer Marc Dunoyer, who netted £7.7 million. The deal’s expected to close in the third quarter this year.
As part of Soriot’s 2020 performance-based share awards, AZ granted its CEO 96,080 ordinary shares at a face value of £7.09 million, which won’t be up for evaluation until the end of 2022.
Moving into 2021, the board’s proposing some changes to its top executive’s paycheck makeup. It’s aiming to increase the cap on Soriot’s performance share award to 650% of base pay from the current 550%, while reducing the level of pension contributions to 11% of base pay, in line with the company’s wider workforce. The design is meant to reduce the fixed-pay component “while offering more potential when exceptional performance has been delivered,” the board said.
Last January, AZ unveiled the Ambition Zero Carbon program, aiming to achieve zero carbon emissions from its global operations by 2025. Beginning this year, a metric focused on that commitment will be included in execs’ performance-based award arrangement.