Amid investor criticism, AstraZeneca considers link between executive pay and revenue goal
- AstraZeneca is considering how best to link executive pay to revenue goals after reports of shareholder discontent over CEO Pascal Soriot's compensation. The company said it would consult with shareholders on proposals to simplify long term incentive plans.
- A report from the Sunday Times (U.K.) had previously cited unidentified sources saying a number of the company's shareholders planned to oppose Soriot's pay package in an upcoming annual meeting.
- Soriot has repeatedly emphasized AstraZeneca's goal of attaining $45 billion in sales by 2023, particularly through growth in its oncology department. The company has high hopes for its bladder cancer drug durvalumab, and recently acquired the blood cancer med acalabrutinib in its $4 billion deal with Acerta Pharma.
AstraZeneca has been trimming down recently, selling off non-core assets to fund current operations while it attempts boost revenue. Over the long term, the company appears to be working on acquiring successful new drug candidates, particularly in oncology, while it cushions the blow of patent expiries in the short term.
In its fourth quarter earnings report, AstraZeneca cautioned revenue and earnings per share are likely to see a "low to mid single-digit percentage decline" in 2016. This may have played into investor concerns over executive pay.
"While some shareholders have stated they would like to see a direct link between executive pay and the 2023 revenue target that is not necessarily the view of the majority," the company said in an emailed statement. "However, the remuneration committee will continue to evaluate ways in which a more transparent link can be made between executive LTI arrangements and the 2023 revenue target."
In December 2015, the company bought 55% of Acerta Pharma for $4 billion, gaining rights to the blood cancer drug acalabrutinib. The bet has already started to pay off, with the European Medicines Agency awarding orphan drug designation to the drug. Acalabrutinib is currently in phase 3 trials for B-cell blood cancers, as well as earlier stage trials for solid tumors.
Elsewhere, the FDA granted breakthrough therapy status to AZ's durvalumab for the second-line treatment of bladder cancer. Durvalumab is part of the promising class of anti-PD1 treatments which are designed to train the body to recognize and attack cancers. AZ will be playing catch-up in this space, however, as Merck (Keytruda) and Bristol-Myers Squibb (Opdivo) have jumped to an early lead.
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