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%.
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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.
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