'Barely-Disguised' Dividend Hike Boosts AstraZeneca Shares Ahead of Pay Vote

As Pascal Soriot’s proposed pay package sets tongues wagging, 'Astra' fires back with a lovely little dividend…

Ollie Smith 11 April, 2024 | 10:21AM
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Shares in multinational pharmaceutical AstraZeneca (ASTRA) were trading 1.32% higher this morning on news the company will issue a 7% dividend increase – on the same day as a crunch vote on chief executive Pascal Soriot's remuneration package.

Shareholders in the company are due to vote on the package at the company's annual general meeting today. If successful, the vote could increase Soriot’s pay package by £1.8 million this year. The move has faced staunch criticism from proxy advisers, though key shareholders have already leapt to Soriot’s defence.

Speaking to the Financial Times earlier this week, GQG Partners chief investment officer Rajiv Jain, who is among AstraZeneca's top shareholders, spoke of a remuneration problem at the company – arguing Soriot was "massively underpaid".

"There is a compensation issue at AstraZeneca," he told the paper.

"The CEO is massively underpaid […] given AstraZeneca’s impressive turnaround since he joined more than a decade ago."

Analysts, meanwhile, have declared the dividend package a "barely-disguised sweetener". In 2024, the pharmaceutical giant will pay a dividend of $3.10 (£2.47) per share, a 7 % hike.

"Shareholders won’t be blind to the fact that this is a barely disguised sweetener, but it may quell appetites enough to get the divisive package through," says Hargreaves Lansdown lead equity analyst Sophie Lund-Yates.

"The bigger picture for Astra still centres on the work it does on rarer and more complex treatments – dominating this area of the market takes very deep pockets, and that doesn’t appear to be under threat."

AJ Bell investment director Russ Mould says the incident "begs the question whether pay in general has got out of hand" in the pharmaceuticals world.

"Announcing a 7% hike in the dividend is clearly positive for shareholders, but are they being buttered up so their vote swings a certain way? At face value this looks like a ‘something for you, something for Pascal, everyone’s a winner’ strategy," he says.

"There has been a lot of debate about whether Soriot deserves an £18.7 million pay package. He’s certainly delivered a lot of value for shareholders and presided over a major period of growth for the business – and no-one is denying that. The moot point is the scale of his remuneration.

"Does anyone really deserve to take home that amount of money? It’s not wildly out of kilter with some of the peer group and AstraZeneca clearly wants to do everything it can to keep the architect of its success. However, it begs the question whether pay in general has got out of hand in the pharma sector."

At the time of writing shares in AstraZeneca were trading at £108.74.

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Ollie Smith

Ollie Smith  is editor of Morningstar UK

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