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AstraZeneca has promised to increase its dividend this year, ahead of a key shareholder vote on whether to raise pay for its long-standing chief executive Pascal Soriot to up to £18.7mn.
In a statement on Thursday, the UK-based pharmaceutical company said it would pay a $3.10 a share dividend for 2024, 20 cents above the 2023 payout, “underlining the company’s confidence in its performance and cash generation”.
The rise in the dividend payment is intended to compensate for the lower level of shareholder returns, compared with the steady period of growth over the past five years in which shares rose 78 per cent, according to someone familiar with the plan. AstraZeneca’s share price has fallen by more than 8 per cent over the past year.
The announcement comes ahead of the company’s annual general meeting on Thursday afternoon. While many shareholders have already submitted votes ahead of the meeting, the company will confirm later on Thursday if a plan to raise Soriot’s pay by £1.8mn to up to £18.7mn in 2024 has been approved.
The move has been criticised by shareholder advisers Glass Lewis and ISS but welcomed by some big shareholders, with Rajiv Jain, chief investment officer at GQG Partners, saying Soriot is “massively underpaid” given the performance of the business under his watch.
Under the plan up for vote on Thursday, Soriot could earn annual incentive payments based on long-term performance worth up to 850 per cent of his almost £1.5mn base salary.
This compares with the maximum of 650 per cent under an existing policy set in 2021. He would also be in line for a bonus worth up to 300 per cent of his base salary, compared with 250 per cent at present.
Glass Lewis said the raise was “excessive” in a report to shareholders, ahead of the vote. Investors have clashed before with management over Soriot’s pay, with almost 40 per cent of shareholders opposing a plan to increase pay in 2021.
But Jain told the Financial Times: “We have no issues with a CEO receiving proper compensation when he or she is delivering results and in the case of Pascal, we believe the numbers are pretty clear, showing the company has outperformed the FTSE index and its peers, with the exception of Novo Nordisk.”
Norges Bank, which runs Norway’s sovereign wealth fund and is a top-10 shareholder, has also disclosed it will vote in favour of the pay deal, while another top 20 active shareholder said the pay deal should be compared with those of US peers, where chief executives are often paid more than Soriot.
AstraZeneca has also sought to justify the changes by saying it is competing with US peers. Like many European pharmaceutical companies, it makes a large proportion of sales in the US.
“The new policy reflects the need to be competitive in the global market for talent and our compensation is structured to reward performance,” the company said.
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