High pay in the UK hit new heights last month when AstraZeneca’s (AZN) new policy was voted through by shareholders. This increased the package of its chief executive, Pascal Soriot, to a potential £18.9mn, much against the advice of proxy advisers.
Michel Demaré, who chairs AstraZeneca, claims that the proxies operate double standards. They advise shareholders to vote against high pay in the UK, but support even higher pay in US and Swiss businesses. This is because proxies follow the conventional wisdom of applying local rates: they compare AstraZeneca’s pay with other FTSE 100 companies. This, Demaré maintains, is inappropriate. Except for GSK (GSK), other FTSE 100 constituents operate very different businesses, and in terms of size, only Shell (SHEL) has a market cap as large.
In the annual report, Sheri McCoy, who chairs the remuneration committee, says that “our employees are rightly viewed as market-leading talent”, by which she means their capability and experience make them ripe for poaching. McCoy says that “40 per cent of our senior leaders are based in the US and over 40 per cent of our revenue derives from the US” and when the group recruits, it needs to “compete for the best talent in the US market”. Paying at market rates, then, is critical for both retention and recruitment, but how likely are UK people to move abroad? Demaré says that “our [top people] are based everywhere and are mobile worldwide”.