AstraZeneca’s new chairman believes the drugmaker has extinguished the threat that CEO Pascal Soriot will step down for lucrative roles in the US, saying the benefit of boosting his pay in recent years has outweighed criticism from some shareholders .
London’s largest listed company suffered a shareholder rebellion over pay in 2021 when, for the second consecutive year, it significantly increased the size of the bonus Soriot could receive.
Michel Demaré, who led the pharmaceutical group’s remuneration committee before starting to chair it last week, said Soriot knew “that if he wanted to achieve more in the United States, he would. But he has a very exciting project here. So I think we don’t believe that’s a problem now.”
Under Soriot, who led AstraZeneca for more than a decade, the group has become the most valuable company in the London market, with a market capitalization of £185bn. Sales of its innovative cancer drugs have helped propel the group to three times the size of British rival GSK.
Demaré’s assessment came as the head of the London Stock Exchange said executives in the UK must be paid more whether the City’s stock markets can withstand a growing threat from the United States.
“We should be encouraging and supporting UK companies to compete for talent on a global basis,” said Julia Hoggett this week.
Soriot’s record has made him a sought-after CEO in the pharmaceutical industry, where executives in the US are typically paid the most.
The 63-year-old had initial talks with Biogen when the US biotech was looking for a new chief executive last year, according to people familiar with the matter.
Soriot was paid a total of £15m last year, similar to the pay of the former Biogen chief executive in 2021, despite the US biotech being a much smaller company with a market capitalization of £37bn . Biogen’s new CEO has received a membership package worth £24 million.
Demaré declined to comment directly on the Biogen talks, but said that at much larger AstraZeneca, Soriot could set up “a few Biogens in the years to come.” Biogen declined to comment on the talks.
AstraZeneca had shown Soriot it was willing to put up with “major criticism” to boost his compensation, Demaré added.
In 2021, around 40% of votes cast at the company’s annual general meeting were against the pay proposal, including from big UK shareholders such as Aviva and Standard Life Aberdeen.
The UK pharmaceutical industry has previously lost executives for pay. In 2019, Namal Nawana, an Australian who had worked in the US, left as chief executive officer of Smith & Nephew because the British medical device company was unable to meet his salary demands.
Demaré said investors were worried Soriot might consider leaving AstraZeneca. He’s “too soon” to talk about replacing Soriot, though he added that the Anglo-Swedish company does “desktop succession exercises,” as it would any top executive.
“I’m totally relaxed about it. It’s something that will probably come while I’m president, but possibly in the following years,” she said of the day Soriot finally leaves.
Sorot said in February that he did not want to leave “so soon” and that he hoped that, at the right time, an internal candidate would replace him. Demaré said Soriot shouldn’t have commented on this, because it was the board’s responsibility.
Though AstraZeneca is based in Cambridge, Soriot’s family home is in Australia, a situation that has left him stranded in the country for months during the pandemic.
Demaré said Soriot traveled all the time and coped well, including on conference calls at 3 a.m. if he was in Australia. “He’s never shown to be less busy or unavailable,” he told her.
As fears about the attractiveness of the London stock market mount, Demaré said he doesn’t see any “handicap” or discount from the company that has its main listing in London. AstraZeneca also has a secondary listing in New York.
Famous for its Covid-19 vaccine, which the company has sold to a non-profit, Demaré said Soriot has built a “fantastic pipeline” of drugs that would drive future growth.
“Some people say I’m going to join at the top of the roller coaster, and others that I’m jumping on a bullet train and the role is to keep them on the tracks,” she said. “It’s not the end of the story.”
Demaré joined the AstraZeneca board in 2019 and succeeded Leif Johansson as chairman. Previously, he was a deputy chairman of the board of directors of UBS until May 2019 and chief financial officer of the ABB industry group.
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