AstraZeneca has been rocked by one of the biggest shareholder revolts over executive pay this year, after more than a third of investors failed to back the pharmaceutical company’s remuneration report.
More than 37% of shareholders voted against or abstained at the company’s annual shareholder meeting in London on Friday in the second rebuke by investors for the company in as many years.
The rebellion opposed a £9.4m pay package for chief executive Pascal Soriot, even though this was a drop from £14.3m a year earlier, when the company suffered votes against its pay policy and warnings from shareholder advisory groups over its bonus plans.
Earlier this month, the advisory group International Shareholder Services advised investors that a £1.9m bonus for the chief executive was “not suitably aligned with performance”, while another group, Pirc, advised shareholders to vote against the pay report, arguing that targets set by the remuneration committee were not challenging enough.
Shares in AstraZeneca dropped on Friday after it revealed a 46% drop in operating profits for the first quarter, with earnings tumbling to $896m, which was much worse than feared by City analysts. It was hit by competition from generic drugs to its cholesterol fighting drug Crestor, as well as higher costs.
The board receiving a grilling from investors , with one, John Farmer, saying that despite the revolt over pay last year “the remuneration is still far too high”. He added: “[The CEO] is being overpaid for underperformance. It’s a collective shambles [on behalf of the board].”
Graham Chipchase, the chairman of the remuneration committee, replied saying the company was mindful of a public debate over high executive pay and the board had to support its managers through a turnaround phase, started by Soriot in 2012.
“If Pascal and his team had not come along when they did, we would have been in a far worse position than we are in today,” he said.
The rebellion at AstraZeneca comes after investors in turnaround specialist Melrose staged one of the largest revolts this year, triggered by disgruntlement over a decision to pay a £42m bonus to each of four directors.
Nearly 26% of Melrose shareholders who voted at its annual meeting earlier this month failed to back its pay report, with leading City institution and top 20 shareholder Standard Life Aberdeen among the rebels.
Opposition from more than 60% of voting investors forced Inmarsat to rip up its pay proposals, continuing a long-running dispute that had broken out into rebellion three times in the past six years.
More than a third of Unilever investors registered opposition to its pay plans earlier this month, while Persimmon experienced a revolt against the “grossly excessive” £75m bonus handed to its chief executive, Jeff Fairburn.
The payout was ultimately approved because nearly a third of shareholders abstained and of those who voted, 51.5% cast in favour and 48.5% against.
