2016 compensation: $17.4 million
AstraZeneca CEO Pascal Soriot had a good 2016—judging by his pay package, at least. The U.K. drugmaker’s chief racked up a 68% increase in total compensation (PDF) last year, thanks to incentive pay and bonuses.
Soriot’s 2016 compensation added up to £13.4 million, up from £7.96 million in 2015, according to AstraZeneca’s annual report. In dollar terms, that’s more than $17 million at the average exchange rate for 2016, per the U.S. Internal Revenue Service ($1 equals £0.77).
Of course, the numbers disclosed in the company’s annual report don’t all reflect Soriot’s actual take-home pay. Cash payouts for 2016 include his salary, at £1.19 million, and two-thirds of his annual bonus of £1.168 million. His taxable benefits amounted to £121,000.
In the company’s annual U.S. securities filing, AstraZeneca’s remuneration committee chief, Graham Chipchase, ticked off the reasons behind Soriot’s bonus pay, which actually fell in 2016. For instance, he cited durvalumab, the cancer immunotherapy filed with the FDA last year and since approved in the U.S., and filings for new indications for its lung cancer med Tagrisso, as evidence of its “strong pipeline performance” for the year. And though AstraZeneca’s product sales slumped by 10% for 2016—thanks to new generic competition for its big-selling Crestor—its “growth platforms” ratcheted upward by 4% to account for 63% of the company’s total revenue.
Plus, the executive team “has taken care to manage costs” to the point where it cut SG&A expenses by 12%, Chipchase wrote. Indeed: AstraZeneca announced a $1.1 billion cost-savings plan early last year and has since announced plans to cut 700 jobs with talk of more.
But in the end, at-target or below-target performance in various areas pulled down Soriot's bonus payout to just 54% of his potential maximum. Clinical-stage licensing and partnering deals? New oncology growth? Exceeded target. But Brilinta’s “return to growth” performance fell below goal, as the blood thinner fell short in a couple of trials that might have led to new indications. The company said in October that it was dialing back its long-term hopes for the drug, which had been pegged as a $3.5 billion earner.
That’s Soriot’s annual bonus calculation; the same considerations feed into the level of payoff on his long-term incentive pay. And those amounts were far more significant. They include dividends on long-term incentive shares worth £6.91 million, the accrued performance-based payoff from awards made in previous years.
Soriot also collected £3.62 million in additional incentive compensation, negotiated as part of his sign-on pay as a repayment for lost incentive compensation at his previous employer, Roche. According to the securities filing, those shares and dividends don’t vest until 2021.
With £357,000 in pension benefits and £21,000 in other compensation, that brings us to £13.4 million—or just £9.766 million if you leave out Soriot’s signing bonus, or $12.68 million.