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.
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.
-
Rail fares could spike by 5.8% next year – how to save on train travelJuly’s RPI inflation reading tends to determine rail fare hikes in the following year. We look at how much your train tickets could cost, and how to save money
-
'Governments are launching an assault on the independence of central banks'Opinion Say goodbye to the era of central bank orthodoxy and hello to the new era of central bank dependency, says Jeremy McKeown
-
Why investors can no longer trust traditional statistical indicatorsOpinion The statistical indicators and data investors have relied on for decades are no longer fit for purpose. It's time to move on, says Helen Thomas
-
Investors rediscover the virtue of value investing over growthGrowth investing, betting on rapidly expanding companies, has proved successful since 2008. But now the other main investment style seems to be coming back into fashion.
-
8 of the best properties for sale with shooting estatesThe best properties for sale with shooting estates – from an estate in a designated Dark Sky area in Ayrshire, Scotland, to a hunting estate in Tuscany with a wild boar, mouflon, deer and hare shoot
-
The most likely outcome of the AI boom is a big fallOpinion Like the dotcom boom of the late 1990s, AI is not paying off – despite huge investments being made in the hope of creating AI-based wealth
-
What we can learn from Britain’s "Dashing Dozen" stocksStocks that consistently outperform the market are clearly doing something right. What can we learn from the UK's top performers and which ones are still buys?
-
The rise of Robin Zeng: China’s billionaire battery kingRobin Zeng, a pioneer in EV batteries, is vying with Li Ka-shing for the title of Hong Kong’s richest person. He is typical of a new kind of tycoon in China
-
Europe’s forgotten equities offer value, growth and strong cash flowsOpinion Jonathon Regis, co-portfolio manager, Developed Markets UCITS Strategy, Lansdowne Partners, highlights forgotten equities he'd put his money in
-
How retail investors can gain exposure to Lloyd’s of LondonIt’s hard for retail investors to get in on the action at Lloyd’s of London. Here are some of the ways to gain exposure
