March 2, 2015
By Alex Keown, BioSpace.com Breaking News Staff
CAMBRIDGE, England -- Since rejecting a takeover bid from American pharmaceutical giant Pfizer Inc. last year, management at AstraZeneca PLC is under pressure to link bonus pay to hitting a targeted $45 billion in sales by2023—an idea executives floated to investors during discussions with Pfizer.
According to reports in the British media, AstraZeneca Chairman John Varley, who also chairs the company remunerations committee, told shareholders during a call that he was pressuring management to link executive bonuses to that sales goal, something management suggested should happen it AstraZeneca remained an independent entity during Pfizer’s takeover bid. That promise was something that resonated with shareholders too during the talks between the two companies. Last spring Richard Buxton, the head of UK equities at Old Mutual Global Investors, told British media that linking bonuses to the sales target would be a way to ensure that directors’ pay was linked to the potential losses for shareholders.
“If the remuneration committee of AstraZeneca – and indeed any company rejecting an offer in favour of long-term independence – was to recalibrate any current and future incentives to vest only at the level of the spurned offer, it 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,” Buxton wrote in a letter published in the Financial Times of London last year.
Likewise Robert Talbut, the chief investment officer of Royal London Asset Management, and another AstraZeneca investor told The Guardian that if management was confident in its sales prediction, then it was “fair and reasonable” that bonuses be tied to that target.
Those investor comments came on the heels of AstraZeneca rejecting a bid from Pfizer to purchase the Cambridge-based company for £55 per share, about $84.7 per share. Company executives were holding out for £58.85 per share, about $90.63 per share, according to reports.
AstraZeneca has been making big moves to shore up its pipeline through expansion of research and development as well as making its own acquisitions.
In 2013 AstraZeneca announced plans to move its headquarters from London to Cambridge and expand research and development opportunities at the site. Currently the company has about 1,000 employees in Cambridge, but that number will expand to about 2,500 when the move is complete in 2016. The new site will become AstraZeneca‘s largest center for cancer research and will also focus on cardiovascular, metabolic, respiratory, inflammation and autoimmune disease research. In February AstraZeneca received final approval from the city of Cambridge to begin construction on the $500 million site, which came on the heels of an announced 3 percent revenue growth over 2014 that included six product approvals during the year and plans to purchase U.S. pharmaceutical company Actavis plc for $600 million.
Also in February, AstraZeneca finalized a $600 million deal to acquire the rights to Actavis PLC’s branded respiratory business in North America. The company will own the development and commercial rights in the U.S. and Canada to Tudorza Pressair, an aclidinium bromide inhalation powder, which is a twice-a-day medication for chronic obstructive pulmonary disease (COPD), and Daliresp, a once-daily oral PDE4 inhibitor for COPD. In 2014 the two medications had a combined annual sale of $230 million in the United States.
In addition to the facilities in England and Sweden, AstraZeneca also has a large research facility in Gaithersburg, Md.
