AstraZeneca faces potential shareholder dissent over executive pay: report

AstraZeneca investors are being urged by proxy advisory firm Institutional Shareholder Services (ISS) to vote against the drugmaker's non-binding pay report at its annual meeting this month, the Financial Times reported Monday. "A vote against this resolution is warranted on account of concerns around the level of disclosures and the outcomes under the company's annual bonus framework," ISS stated.

Compensation for CEO Pascal Soriot reportedly fell from 14.3 million pounds ($19.4 million) in 2016 to 9.4 million pounds ($12.7 million) last year. However, ISS noted that Soriot received a bonus of 87 percent of the maximum amount despite a 14-percent decline in AstraZeneca's per-share earnings in 2017 and a 25-percent drop in operating profit.

"Since his appointment as group CEO in October 2012, Soriot has on average received a bonus of up to 82 percent of maximum," ISS noted, adding "this does indicate the need for the remuneration committee to set more stretching targets within the bonus framework."

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The proxy advisory firm also argued that outcomes revealed under AstraZeneca's bonus scheme did not align with figures stated elsewhere in the drugmaker's annual report. "It is worth noting that if the company had used the figures used elsewhere within the annual report, the outcomes for both core [earnings per share] and total revenue would have been below maximum, thereby limiting the outcome received by the executive directors," ISS explained.

Further, the group flagged issues about disclosure at AstraZeneca, saying that while the company had made some attempts to address investor concerns about pay, in part by providing more information on performance hurdles for the financial target, it did not go far enough and lagged behind in terms of market practice.

AstraZeneca said it regularly discussed executive compensation with major shareholders, noting that in response to feedback, it had made changes to its pay report, "including introducing a simplified bonus structure and enhanced disclosure." The company said "we note that a shareholder advisory body has expressed some concern over remuneration disclosure this year," but pointed out that "it also notes that the general level of concern over 'pay for performance' is low."

Separately, advisory firm Glass Lewis recommended that shareholders back the remuneration report, describing it as a "reasonable disclosure of the company's executive compensation policies and structure."

Last year, Soriot was rumoured to be leaving AstraZeneca to join Teva as chief executive, but another report later indicated that he would remain as head of the UK drugmaker for the foreseeable future.

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