AstraZeneca’s investors are repeating history with a revolt against executive pay. Almost 40% voted against CEO Pascal Soriot’s 2016 compensation package on Thursday, just about the same percentage that tossed tomatoes at the numbers back in 2014.
This time around, Soriot’s compensation total was much higher—£13.4 million, or about $17.3 million—compared with the £3.34 million ($5.6 million), plus potential performance awards of £4.35 million, that touched off the revolt three years ago.
This year’s vote also follows some restiveness over the last two years as leading shareholders called on AstraZeneca’s board to tie Soriot’s pay more directly to the $45-billion-by-2023 revenue goal he set when Pfizer was trying its takeover. That goal, which some analysts called laughably ambitious at the time, is no less aggressive now, and Soriot himself has since said the company would be "lucky" to hit it.
The 39% vote against AZ’s 2016 compensation report has no direct consequences. It’s advisory only. The binding vote on compensation, which applies to the coming year’s remuneration plans, was in favor, almost unanimously, with 96% backing the scheme.
“AstraZeneca engaged extensively with its major shareholders on remuneration matters during 2016,” the company said in a statement, adding that the proposals for the coming year were based on shareholder feedback. One change, the company said in its annual report, is the demise of the AstraZeneca Investment Plan (AZIP), previously used to deliver performance awards.
One line item skeptical investors approve is the continued requirement that bonus payments hinge on AstraZeneca delivering earnings of at least $4.20 per share—which the company isn’t expected to do this year. That means Soriot’s long-term awards due for vesting in 2017 aren’t likely to pay out in full, Thomson Reuters reported in February.
As for the negative votes on 2016’s numbers? The company figures they stem from concerns about past incentive awards made under AZIP, and how they’ll be handled going forward. The company also cited “the level of information given about the annual bonus plan and awards.”
And here’s where we get into the nitty-gritty of Soriot’s 2016 package. The helmsman scored AZIP awards three years ago that paid out in 2016 according to various performance measures. That payout, which included dividends on long-term incentive shares, was worth £6.91 million.
Soriot also collected £3.62 million from his original sign-on package, designed to repay incentive compensation he had to forgo when decamping from previous employer Roche. According to the company’s annual securities filing, those shares and dividends don’t vest until 2021.
Meanwhile, Soriot’s bonus for 2016 actually shrank, to £1.2 million from £2 million, as below-target performance on some measures—including Brilinta sales and clinical trial data—weighed against better grades on cost-management, new oncology growth, and licensing and partnering deals, according to the filing.