AstraZeneca Braced For Investor Pay Protest

AstraZeneca is braced for dissent from leading investors over executive pay almost a year after it saw off a £69bn takeover bid from Pfizer.

Sky News understands that the FTSE-100 drugs giant will be the subject of a modest shareholder revolt at its annual meeting on Friday.

A number of investors are understood to have decided to vote against AstraZeneca's remuneration report because it has not explicitly linked long-term incentives for management ‎to the revenue targets it set out in its defence against Pfizer's bid.

Pascal Soriot, AstraZeneca's chief executive, set out a series of ambitious sales targets last year in an attempt to win backing for the company as it sought to fend off Pfizer.

These included hitting a $45bn revenue goal by 2023, and separate objectives for the company's key growth areas, including its diabetes and respiratory drugs.

John Varley, the former Barclays chief executive, held talks with leading shareholders in the pharmaceuticals group last year in his capacity as chairman of AstraZeneca's remuneration committee.

Mr Varley is due to retire from the board on Friday, and will be replaced at the helm of the pay committee by Graham Chipchase.

In the company's annual report, Mr Varley wrote that the framework for long-term share awards "will continue to link directly to the long-term business plan (including the 2023‎ $45bn revenue target, which we announced in May 2014), with measures aligned to each key stage of the pipeline".

However, one leading shareholder said it was not convinced that the link was sufficiently strong given the emphasis that the company had placed on the target during its takeover defence.

In a letter to the Financial Times after Pfizer abandoned its £55-a-share offer, Richard Buxton, a fund manager at Old Mutual Global Investors, wrote that incentives for AstraZeneca executives should "vest only at the level of the spurned takeover".

He said that this would "provide comfort to shareholders that if things do not play out as the management envisage, the executives have shared in the pain felt by shareholders at the lost opportunity".

It was unclear whether Old Mutual is among the investors planning to support AstraZeneca's pay report.

Insiders said that while AstraZeneca acknowledged that some investors would vote against its remuneration report, the revolt would be less significant than last year, when 40% of shareholders opposed its motion on the previous year's pay.

Last year, Mr Soriot was paid a total of £3.5m, up from £3.3m in 2013.

In a statement on Thursday, an AstraZeneca spokeswoman said: "We believe the views of our remuneration committee and our shareholders are aligned; remuneration is linked to strategy and delivery.

"Our remuneration has been designed to link executive remuneration to our short, medium and long-term plans."