Proxy advisers have taken shots at AstraZeneca CEO Pascal Soriot’s pay package before. Now one of the influential firms is on the march again—but this time, it's campaigning against re-electing the pharma's longest-serving board member.
Glass Lewis is opposing Marcus Wallenberg, 62, who's on the ballot for re-election as a non-executive board member. The advisory firm argues that Wallenberg's other jobs could prevent him from devoting “the time necessary to fulfill the responsibilities required,” The Telegraph reported.
And this is not the first time investors have rallied against him. Last year, a fifth of AstraZeneca shareholders called for his removal, according to The Telegraph.
The proxy adviser may have a point. As a member of the prominent Wallenberg family in Sweden—where AZ’s stock is also listed—Marcus Wallenberg also serves as the chairman of banking company Skandinaviska Enskilda Banken (SEB), Saab Group, and Foundation Asset Management (FAM). He also serves as a board member of the Wallenberg empire’s investment firm, Investor AB, as well as Temasek Holdings and the Knut and Alice Wallenberg Foundation.
“A non-executive director of a FTSE 100-listed company should retain some spare capacity in case a crisis or other event escalates the demand on their time,” Glass Lewis said, as quoted by The Telegraph.
In 2018, Wallenberg attended 11 of 13 board committee meetings, the lowest rate among all 12 members; in 2017, he showed up at six of eight board meetings he was entitled to attend, also the least frequent among his fellows, according to AZ’s annual reports. He earned £103,000 in remuneration last year, ranking eighth among 10 nonexecutive directors.
However, on the flip side, Wallenberg's roles elsewhere could be construed as beneficial to AZ. That's certainly what the drugmaker itself argues: In its 2018 annual report, AZ says Wallenberg has “international business experience across various industry sectors,” and that “the Board believes that he has brought, and continues to bring, considerable business experience and makes a valuable contribution to the work of the Board.”
An AstraZeneca spokesman reiterated that point in a statement sent to FiercePharma Monday, adding that Glass Lewis’ view “is not one that is shared by other advisory bodies.”
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Wallenberg is one of three nonexecutive members of the science committee on AZ’s board. Under that leadership, the British drugmaker just agreed to a deal worth $6.9 billion for Daiichi Sankyo’s lead antibody drug conjugate for HER2 tumors.
Wallenberg is the longest-serving board member at AZ, having joined Astra in May 1989, ten years before the 1999 Zeneca merger. He is also the only incumbent member not considered “independent” under the U.K. Corporate Governance Code, what with his role at Investor AB, which has a 4.07% interest in AZ’s shares as of Feb. 14.
The Wallenberg family also has deep connections with AZ’s current chairman. Leif Johansson, who’s also a Swedish businessman, served as chairman of telecommunications giant Ericsson until 2017, and, back in the 1990s, as CEO of Electrolux. Wallenberg’s family holds 16% of Electrolux and 7% of Ericsson. And none other than Marcus’ cousin Jacob Wallenberg served as—and still is—one of Ericsson’s deputy chairmen.
AZ has been challenged by proxy firms before. Last year, Soriot’s £9.4 million pay package prompted dissidence from Institutional Shareholder Services (ISS), which argued that the CEO’s bonus was too high considering the company’s performance.