AstraZeneca CEO’s £1.8mn pay rise approved despite shareholder opposition
AstraZeneca hiked its dividend to persuade shareholders to accept CEO Pascal Soriot’s pay rise. Is he worth his salary?
AstraZeneca (AZ) has shrugged off a “significant... revolt”, says Ian Johnston in the Financial Times. Shareholders approved a potential £1.8m pay rise for CEO Pascal Soriot, but more than a third of them voted against a package advisers had called “excessive”. Critics had argued that Soriot was already one of the best-paid CEOs in the blue-chip index; he received £16.9m last year.
His supporters insisted that he was “massively underpaid” given the performance of the business under his watch. AstraZeneca also argued that the raise was needed in order “to be competitive in the global market for talent”, especially in relation to the US.
It’s hard to deny that Soriot is “underpaid”, especially given his “stupendous” success, says The Times. In 12 years on his watch, AstraZeneca’s share price has increased by 268% compared with an average gain across the FTSE 100 of 36%.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
It has also “successfully launched a series of next-generation oncology medicines, partnered with Oxford University in bringing out a Covid vaccine in record time and built a research and development campus in Cambridge employing 2,300 scientists”. What’s more, given that demand for top executives is “intensely mobile”, the city’s “top talent must be fully incentivised to stay put”.
US pay is out of control
It’s true that AZ’s top team could be poached by US rivals offering “greater fistfuls of dollars”, says Nils Pratley in The Guardian. Still, just because US executives’ pay is “wild, and becoming wilder by European standards”, doesn’t mean that UK companies should follow suit, especially since the idea that the two markets are comparable is “selfserving nonsense” in many cases.
Many FTSE firms already “take their owners for fools”, especially Centrica, which “somehow thinks £8.2m for its chief executive Chris O’Shea was an acceptable outcome last year”. The issue isn’t going away, says Oliver Shah in The Sunday Times. This is shaping up to be a “landmark annual meeting season for corporate pay”, as years of “boardroom grumbling” over the differential with the US and private equity have “led to action by a few plucky pioneers”.
Both the London Stock Exchange Group and Smith & Nephew want to hike the amount that their CEOs can receive. While there are plenty of “mediocre” CEOs “who very much don’t need a pay rise”, there is evidence that in some cases “one-size-fits-all solutions” are “holding back” the biggest companies.
On balance, the “grumbling” about Soriot’s pay may have been misguided, as he is “probably worth it” given the “astonishing returns” he has delivered, says Alex Brummer in the Daily Mail. Still, the kerfuffle means that shareholders will benefit too. Hours before the vote AstraZeneca threw in an extra “sweetener” to persuade them to approve the package: a 7% increase in the dividend this year.
This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.
He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.
Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.
As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.
Follow Matthew on Twitter: @DrMatthewPartri
-
Is it a good time to invest in the UK?
Temple Bar Investment Trust is a diversified bet on British equities and looks excellent value, says Max King
By Max King Published
-
Stamp duty calculator: how much of a UK sold house price is taxed?
Our stamp duty calculator shows you how much the tax will cost you, depending on which band the house price you’re paying falls into.
By Henry Sandercock Published
-
Is it a good time to invest in the UK?
Temple Bar Investment Trust is a diversified bet on British equities and looks excellent value, says Max King
By Max King Published
-
Top-quality, rapidly growing European stocks are selling at enticing valuations
Timothy Lewis, portfolio manager at JPMorgan European Growth & Income tells us where he’d put his money
By Timothy Lewis Published
-
Adidas, Nike or Jordans - could collectable trainers make you rich?
The right pair of trainers can fetch six figures. Here's how you can start collecting vintage Adidas, Nike or Jordans now
By Chris Carter Published
-
The industry at the heart of global technology
The semiconductor industry powers key trends such as artificial intelligence, says Rupert Hargreaves
By Rupert Hargreaves Published
-
Three emerging Asian markets to invest in
Professional investor Chetan Sehgal of Templeton Emerging Markets Investment Trust tells us where he’d put his money
By Chetan Sehgal Published
-
What to consider before investing in small-cap indexes
Small-cap index trackers show why your choice of benchmark can make a large difference to long-term returns
By Cris Sholto Heaton Published
-
Why space investments are the way to go for investors
Space investments will change our world beyond recognition, UK investors should take note
By Merryn Somerset Webb Published
-
Time to tap into Africa’s mobile money boom
Favourable demographics have put Africa on the path to growth when it comes to mobile money and digital banking
By Rupert Hargreaves Published