AstraZeneca PLC Seeks Ways to Link CEO and Top Execs' Pay to $45 Billion Sales Target
March 14, 2016
By Alex Keown, BioSpace.com Breaking News Staff
LONDON – AstraZeneca is exploring ways to link pay for Chief Executive Pascal Soriot and other top executives to the company’s $45 billion target revenue by 2023.
AstraZeneca’s announcement came following some concerns by investors that the company would not hit that goal Soriot promised after the company fended off a $118 billion takeover attempt from Pfizer in 2014, Reuters reported this morning. Shareholders' concerns were increased after AstraZeneca forecasted that profits would likely decline this year as its cholesterol drug Crestor faces increased competition in the U.S. due to generics and newer mediations.
Because of those concerns, some investors are demanding a long-term investment plan that will link executives’ pay to those goals, an AstraZeneca spokesperson told Reuters. The spokesperson said that view is not held by the majority of shareholders.
"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,” AstraZeneca told Reuters. "They will continue to consult with major shareholders and shareholder representative bodies on proposals to further simplify our LTI plans for the future where practicable."
Bloomberg reported Soriot and his team’s performance is evaluated on two criteria—“that the dividend stays at or above $2.80 per share and core earnings don’t fall below 1.5 times the dividend, or $4.20 per share.”
Citing unnamed sources, The Sunday Times of London reported more than 20 percent of AstraZeneca shareholders may reject Soriot's remuneration package in April.
But while some shareholders are not happy with company forecasts, AstraZeneca is in the process of bolstering its pipeline through several deals, including the $575 million deal with Takeda Pharmaceutical Company to acquire that company’s core respiratory business, including global rights to roflumilast, a treatment for chronic obstructive pulmonary disease (COPD).
A big money-making drug is something AstraZeneca is looking for to meet its revenue goal of $45 billion in sales by 2023. Acquiring new drugs through mergers and acquisitions will help the company offset declining revenues of drugs that are facing patent loss and increased generic competition, including the antacid Nexium and its heart drug Crestor. Last month, AstraZeneca saw the approval of Tagrisso, its new treatment for non-small lung cancer.
In December, AstraZeneca was looking to bolster its oncology pipeline by acquiring the privately-held Acerta Pharma BV for more than $5 billion. Neither AstraZeneca nor Acerta have commented or confirmed the reports of the acquisition.
In addition to acquisitions, AstraZeneca is also divesting itself of excess fat. Earlier this month the company sold the rights to Moventig (naloxegol) in Europe to ProStrakan Group, a subsidiary of Kyowa Hakko Kirin Co., Ltd. for $70 million.
AstraZeneca’s stock is down this morning, trading at $29.26 per share.