Sector News

AstraZeneca director pushing to tie exec pay to big growth promises

March 3, 2015
Life sciences
The promises are coming home to roost for AstraZeneca CEO Pascal Soriot. Or so reports The Sunday Times, which says the U.K.-based company is once again under pressure to put Soriot’s bonus pay on the line for the big goals he touted in defending against Pfizer’s $100 billion takeover bid last year.
 
Soriot and his team fought hard against Pfizer’s £55-per-share bid, and in the process promised to send sales soaring to $45 billion by 2023. Last summer, some top shareholders suggested directly linking executive pay to progress toward those goals. And in an interview late last year, Soriot said the company would have to be “lucky” to reach that sales target.
 
Now, as lead independent director John Varley is nearing the end of his term, he’s said to be urging fellow board members to tie executive bonuses to that target. According to the Times, Varley told major AZ shareholders that he would propose ways to gauge that progress, beyond the usual targets related to share price and earnings growth. Varley hasn’t ponied up those proposals yet, however, the sources say. And he’s running out of time, with his term expiring next month.
 
Here’s the shareholders’ case, according to the Times: Soriot and his team aren’t likely to remain at the company through 2023, the date that $45 billion is supposed to be in hand. In the meantime, their pay packages don’t depend directly on hitting benchmarks toward that figure. Meanwhile, AZ shares are up to £44.69–past the £43.08 they were worth as Pfizer abandoned its pursuit.
 
“We’re concerned the management get paid out because the share price has gone up, and actually they don’t deliver anything to justify these forward-looking revenue targets,” a source told the Times. “Nobody really knows whether the [drug development] pipeline is going to deliver.”
 
AstraZeneca’s Q4 results didn’t bolster investor confidence, either; sales dropped by 6% for the period.
 
But AZ says its existing incentive plans already fit the bill. Executives are measured by how they deliver “against strategy,” and their performance “reinforces our confidence in achieving the long-term target” of $45 billion by 2023, the company told the newspaper. And as the Times points out, at least one analyst figures Soriot could lose £4 million in long-term bonuses if earnings drop over the next two years.
 
Soriot says he knows he has to put up the numbers for shareholders one way or another. In December, he said his job depends on it. “If I don’t deliver the value, I assume I’m not going to be around,” he said at the time.
 
By Tracy Staton
 

comments closed

Related News

June 24, 2022

Echosens and Novo Nordisk announce partnership to increase awareness and advance early diagnosis of NASH

Life sciences

Echosens, a high-technology company offering liver diagnostic solutions, and Novo Nordisk A/S, a leading global healthcare company, announced a partnership to advance early diagnosis of non-alcoholic steatohepatitis (NASH) and increase awareness of the disease among patients, healthcare providers and other stakeholders.

June 24, 2022

argenx receives positive CHMP opinion for Efgartigimod for the treatment of adult patients with Generalized Myasthenia Gravis in Europe

Life sciences

Positive opinion based on Phase 3 ADAPT trial showing efgartigimod provided clinically meaningful improvements in strength and quality of life measures. If approved, efgartigimod will be the first neonatal Fc receptor (FcRn) blocker for the treatment of adults in Europe living with rare neuromuscular disease generalized myasthenia gravis (gMG).

June 24, 2022

Galapagos finally takes M&A plunge, spending $251M for 2 biotechs in CAR-T push

Life sciences

Galapagos CEO Paul Stoffels, M.D., has finally taken the plunge on M&A. The newly minted chief executive has signed not one but two deals in an attempt to right the ship, bringing two small biotechs aboard for a combined 239 million euros ($251.4 million).