A FRESH debate on executive pay was ripping through the City yesterday as one of the biggest shareholders in Astrazeneca said the FTSE 100 drugmaker's boss was "underpaid".

Astrazeneca's chief executive, Pascal Soriot, is in line for a £1.8m pay rise which will take his total pay packet to £18.7m if a new policy is waved through by shareholders at its annual general meeting tomorrow.

The move has faced resistance from the influential proxy advisory groups Glass Lewis and ISS which have both urged shareholders to reject the pay packet on the grounds it is "excessive".

However, Rajiv Jain, the chief investment officer of Florida-based GQG Partners - a top 20 shareholder in Astrazeneca - said yesterday there was a "compensation issue" and Soriot was "massively underpaid" on his current £16.9m salary, the Financial Times reported.

Soriot has overseen a period of bumper growth at the vaccine maker since taking over the reins in 2012, with shares climbing some 250 per cent under his leadership.

The French-born Australian also led the firm past rival GSK to roll out a not-for-profit Covid vaccine to some three billion people by the end of 2021 at the peak of the pandemic.

The comments point to a thorny debate raging in the City over the levels of pay pocketed by London's top brass and efforts from proxy advisors to reject pay increases.

In notes ahead of London's AGM season, Glass Lewis has already recommended that shareholders reject pay policies at fund house Abrdn and London Stock Exchange owner LSEG.

Some in the City argue that the resistance is placing London-listed firms at a disadvantage to their stateside peers, where salaries typically dwarf those in the UK.

"International London-listed companies compete for talent globally and need to be able to offer proper compensation to do so," Mark Austin, a lawyer at Latham & Watkins and central figure in the reform of UK capital markets, told City A.M.

"We need a level playing field on remuneration and recommendations such as these from some of the proxy agencies are not doing that."

The comments echo calls from London Stock Exchange boss Julia Hoggett last year, who said that London firms were "hampered by the advice and analysis of the proxy agencies and some asset managers voting against executive pay policies even when those pay levels are significantly below global benchmarks."

Emily Watts, corporate finance director at Cavendish, told City A.M. that proxies were also adding to the handicap faced by public companies in recruiting talent against their private peers, where executive pay does not need to be disclosed.

(c) 2024 City A.M., source Newspaper