- Annual dividend upped 7% to $3.10
- Shareholders vote on CEO pay increase
- Soriot one of the highest paid FTSE 100 CEOs
Pharmaceutical giant AstraZeneca (AZN) announced a 7% increase in the annualised dividend to $3.10 per share which the board said, ‘underlined the company’s confidence in its performance and cash generation’.
Chairman Michel Demare explained that the increase is in line with the firm’s ‘progressive’ dividend policy which remains unchanged.
The shares traded 1.3% higher to £108.74 taking the gains for year to 1%, slightly lagging the 3% advance in the FTSE 100.
More sceptical observers related the timing of the announcement to today’s shareholder vote on CEO Pascal Soriot’s proposed £1.8 million pay increase.
AJ Bell investment director Russ Mould commented: ‘It’s no coincidence that AstraZeneca has delivered shareholders some good news on the same day they are being asked to vote on a £1.8 million pay rise for chief executive Pascal Soriot.
‘Announcing a 7% hike in the dividend is clearly positive for shareholders, but are they being buttered up so their vote swings a certain way? At face value this looks like a ‘something for you, something for Pascal, everyone’s a winner’ strategy.
‘There has been a lot of debate about whether Soriot deserves an £18.7 million pay package. He’s certainly delivered a lot of value for shareholders and presided over a major period of growth for the business – and no-one is denying that. The moot point is the scale of his remuneration.’
EXPENSIVE BUT WORTH IT?
Shareholder advisors Glass Lewis and ISS (Institutional shareholder services) have recommended shareholders vote against the proposal.
That view is not shared by top-20 shareholder US investor GQG Partners.
Chief investment officer Rajiv Jain believes Soriot has earned the additional pay due to the strong performance of the business.
Jain told the Financial Times: ‘The CEO is massively underpaid . . . given AstraZeneca’s impressive turnaround since he joined more than a decade ago.’
The pay debate is embroiled in the wider discussion to encourage companies to remain listed in London rather than moving to the US.
CEOs at AbbVie (ABBV:NYSE), Eli Lilly (LLY:NYSE) and Johnson & Johnson (JNJ:NYSE) all earned more than Soriot in 2023.
On the other hand, Soriot is already among the top earners in the FTSE 100, making £16.9 million in 2023, more than the CEOs of European pharmaceutical rivals.
For example, Soriot earned more than double the pay of Novo Nordisk’s (NOVO-B:CPH) CEO Lars Fruergaard Jorgensen last year, despite Novo Nordisk arguably being one of the most successful pharmaceutical companies.
Novo’s shares are up over 400% in the last five years driven by the success of the company’s weight-loss drug Wegovy.
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author of the article (Martin Gamble) and the editor (James Crux) own shares in AJ Bell.
