Why offering a fat bonus to its CEO sets the wrong tone for AstraZeneca
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Instead of fighting controversies, the company is adding to them
AstraZeneca went from being the world’s best bet against COVID-19 to an embattled vaccine. First, the company was hit by shortages and was accused of over-promising doses.
Then came the blood clots. One by one, countries started abandoning them. Instead of fighting these controversies, the company is adding to them. AstraZeneca is offering a big fat bonus to its CEO Pascal Soriot while big pharma is being dragged through the streets. They have been condemned for not sharing vaccine formulas, their profits are being called loot.
In the midst of this, AstraZeneca has offered a bumper bonus to its top boss. The bonus in question is 250 per cent of his base salary. Last year, it was 200 per cent. But in the middle of a pharma crunch, they have bumped it up by 50 per cent. 1.8 million dollars is Soriot’s base salary. 250 per cent of that is Soriot's maximum annual bonus.
The real money comes from share bonuses which was 550 per cent of his base salary last year. This year, it has been raised to 650 per cent. There is no guarantee that Soriot will get all of this, for it depends on whether he hits the company's targets.
Now let's assume that AstraZeneca has a cracking year with great vaccine sales, no controversies and good sentiments in Wall Street. If this happens, Pascal Soriot could take home more than 20 million dollars in 2021. The median income of employees at AstraZeneca is 95,000 dollars. Their CEO earns 267 times more than that. And AstraZeneca is not the only one. This is what CEOs at other pharma giants take home.
Pfizer pays their top boss 21 million dollars. Johnson and Johnson pays 23 million and Moderna pays 13 million. CEOs have always taken home the lion's share - that's how capitalism is built.
Was it right to clear this bonus in the middle of a pandemic?
Soriot has done wonders at AstraZeneca - the share prices have tripled under him and the company is now valued at 100 billion dollars. But even shareholders were split on the decision to offer him a bonus. They gathered for the annual company meeting in Cambridge.
40 per cent of investors opposed the bonus including some big names in fund management like Aviva investors and Standard Life Aberdeen. But a majority backed the move. So Soriot is getting a big cheque this year. The debate around his salary will continue but AstraZeneca has bigger worries.
More and more countries have stopped using their vaccine. The latest are Brazil and Slovakia. In Brazil, pregnant women will not be given the AstraZeneca jab. They say it could possibly trigger strokes. Only one instance has been reported so far in Brazil. Slovakia is saying something similar and have linked a 47-year-old woman's death to the vaccine.
Canada's largest province, Ontario will also stop using AstraZeneca on account of blood clots. In Europe, most of the countries have resumed the rollout. A few like Denmark and Norway have opted against it.
The European Union has filed a second lawsuit which could possibly lead to some big fines. Over-promising shots has come back to haunt them. On top of all this, there is pressure on the company to share its formulas.
There was a small protest at the AstraZeneca campus in the UK. Their vaccine is cheap, easy to store and effective. So it could hold the key to vaccinating the developing world. But AstraZeneca doesn't agree. They keep talking about selling their vaccines at cost which means they are not profiting from their jab.
There is no denying that AstraZeneca is a game changer and it is probably the most important vaccine in the world because the likes of Pfizer are never going to focus on Africa and Latin America.