AGM alert: BP, BAT and AstraZeneca

Efforts by British American Tobacco (LSE:BATS) and AstraZeneca (LSE:AZN) to close the pay gap to US rivals will be in the spotlight when the curtain goes up on this year’s FTSE 100 AGM season.

The Dunhill, Lucky Strike and Vuse business plans to increase the long-term incentive opportunity for chief executive Tadeu Marroco to 600% of salary, making his potential pay deal worth up to £13.9 million before any share price appreciation.

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AstraZeneca last year got approval to award Pascal Soriot up to 850% of his salary, but the move caused controversy as the new remuneration policy only got 64.4% support.

The drugs giant’s response to the dissent and Soriot’s total remuneration figure for 2024 of £14.7 million will keep corporate pay in the spotlight at this year’s AGM.

Astra argues that the policy has been structured so that executive directors will only benefit from the increased remuneration when they deliver strong returns for investors. 

AstraZeneca

When: 2.30pm, Friday 11 April.

Where: On the Lumi online platform and at the broadcast venue, the Kia Oval, Kennington, London, SE11 5SS.

How to participate: The digitally-enabled AGM means non-UK based shareholders, including holders of American Depositary Shares and Nasdaq Stockholm listed shares, can participate in the meeting. Management and board members will take part in the AGM electronically from a variety of locations, and will not be available to meet shareholders in person. Shareholders who still want to attend in person will be invited to connect online to the meeting. The deadline to register questions and to submit votes electronically via the Equiniti Shareview website is 2.30pm, Wednesday 9 April. More AGM details can be found here.

Who’s in the chair? Michel Demaré, who is the ex-finance boss of industrial conglomerate ABB and former chair of agricultural science business Syngenta, has been a member of the board since 2019 and chair since April 2023.

How did the company do in 2024? Revenues of $54.1 billion (£42.8 billion) were 18% higher at actual exchange rates or 21% at constant rates. The US accounted for 43% of the total, having achieved growth of 22% in the year. Core operating profit rose 16% at actual rates to $16.9 billion and earnings per share by 13% to $8.21. An interim dividend of $2.10 a share is due to be paid on Monday, increasing the total for the year by 7% to $3.10 a share. In the year that marked 25 years since the formation of AstraZeneca, the company said it planned to launch at least 20 new medicines and achieve $80 billion in total revenues by 2030.

How have shares performed? Down 1% at 10,468p (11,808p on Thursday).

How much is the boss paid? Pascal Soriot’s total remuneration for 2024 amounted to £14.7 million, his lowest sum since 2018 and down from £17.4 million in 2023. The 84% vesting of long-term incentives contributed £9.4 million, which compared with £12.8 million the previous year. The lower sum was caused by the difference in share price appreciation on the value of the long-term incentives, which at 9% of total remuneration compared with 2023’s 26%. Soriot got an annual bonus of £3.5 million in cash and deferred shares, which was 78.5% of the maximum. His base pay has increased 4% for this year to £1.54 million.

How was variable pay determined? The annual bonus scorecard performance included a 100% result for growth and therapy area leadership and 73% in relation to financial targets. The maximum vesting was achieved in four of the five elements of the 2022 Performance Share Plan, including for net cash flow and zero carbon ambitions. Relative total shareholder return scored 20%.

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How did last year’s AGM go? The binding resolution on the new three-year remuneration policy got 64.43% support. This followed the company’s proposals to increase the upper limit of the chief executive’s long-term Performance Share Plan (PSP) to 850% of base pay from 650% and the annual bonus to 300% of salary compared with 250% previously. 

Why were some shareholders unhappy? According to feedback given to AstraZeneca, there was discontent over the size of the increase in the PSP maximum opportunity and how it compared to the FTSE 100. Some shareholders were also uncomfortable with the decision to increase the maximum opportunity for both the PSP and the annual bonus at the same time. A small number of shareholders said they would have preferred the committee to increase base pay, rather than increase the performance-related pay opportunity.

How has the company responded? The remuneration committee held meetings with many of its leading shareholders, as well as proxy advisers. It said its largest investors understood the rationale for the policy changes, the global nature of the business and the need to be able to compete for talent globally. There was also recognition that UK-listed FTSE stocks are not the right peer group to use, given AstraZeneca’s size, complexity and global footprint relative to FTSE peers, and the influence of pay practice within the global pharmaceutical industry. It points out that the policy is structured so that executive directors will only benefit from the increased remuneration when they deliver strong returns for investors. The metrics used for determining short and long-term incentives are broadly unchanged for 2025.

What’s the view of voting agencies? Glass Lewis remains “somewhat concerned” by the decision to grant long-term incentive awards at maximum, despite significant shareholder opposition to the quantum increases proposed at the 2024 AGM. Having reviewed the pay committee’s response, it does not believe the issue warrants further action at this time. It has recommended shareholders vote in favour of the annual remuneration report.

How’s the company doing on diversity? The gender split of the board at the end of the year was 46% female, including at least one senior role. Women represented 50% of the senior executive team. In addition, 31% of directors identified as an ethnic minority.

BP

When: 11am, Thursday 17 April.

Where: BP International Centre for Business and Technology, Chertsey Road, Sunbury-on-Thames TW16 7LN.

How to participate:BP (LSE:BP.) shareholders can pre-submit questions up until 4 April. Proxy voting instructions should be returned no later than 11am, Tuesday 15 April. More AGM details can be found here.

Who’s in the chair? Helge Lund was appointed in January 2019, having served as chief executive of BG Group from 2015 until its merger with Shell in 2016.

How did the company do in 2024? Upstream production was 2% higher than in 2023 but refining margins were lower and a significant power outage at the company’s refinery in Whiting also had an impact on financial performance. Operating cash flow of $27.3 billion and adjusted earnings of $38 billion were both lower. Strategic milestones included final investment decisions on 10 major projects. A fourth-quarter dividend of eight US cents a share is due to be paid on 28 March, an increase of 10% on the same quarter a year earlier.

How have shares performed? Down 16% at 393p (448.5p on Thursday).

How much is the boss paid? Murray Auchincloss, who was appointed chief executive on a permanent basis in January 2024, is due to see his base salary increase 4% to £1.5 million following the AGM. His total remuneration for 2024 amounted to £5.4 million, which compares with the £10.3 million received by predecessor Bernard Looney in 2022 and $19.4 million paid to Bob Dudley in 2015. Auchincloss's total included cash and deferred shares worth £734,000 based on 22.5% of the maximum annual bonus opportunity. The 66.5% vesting of long-term incentives contributed £2.75 million to the final figure.

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How was variable pay determined? The annual bonus outcome was driven by safety and sustainability performance, which accounts for 30% of the scheme. The thresholds under the remaining elements of operations and financials were not met. The vesting of long-term performance shares was due to the maximum result for financial metrics over the three-year time frame, with no vesting for relative total shareholder return after BP finished in sixth place in the seven-strong comparator group. Even though commitments set out in early 2022 were not fully realised, the remuneration committee decided an outcome of 66% of the maximum was appropriate under the metric of strategic progress.

What’s changing in this year’s bonus scheme? Having reset the company’s strategy in February, the company’s four primary targets of adjusted free cash flow growth, structural cost reduction, return on average capital employed and net debt will form the basis for incentive scorecards. As a result, earnings will be replaced by a structural cost reduction measure with a weighting of 25% and the free cash flow measure will increase from 25% to 30%.

How did last year’s AGM go? The annual remuneration report was approved with 95.88% of votes in favour. 

How’s the company doing on diversity? At the end of 2024, 55% of board roles were held by women, including the senior independent director and chief financial officer. Three directors identify as from an ethnic minority background. 

British American Tobacco

When: 11.30am, Wednesday 16 April.

Where: Hilton London Bankside, 2-8 Great Suffolk St, London, SE1 0UG.

How to participate: The company will endeavour to reply to questions received by 5pm on Tuesday 8 April before the proxy voting deadline on 11.30am Monday, 14 April. More AGM details can be found here.

Who’s in the chair? Luc Jobin was appointed in April 2021, having joined the board in 2017. His previous roles have included as chief executive of Canadian National Railway Company and Imperial Tobacco Canada.

How did the company do in 2024? Revenues fell 5.2% to £25.8 billion, driven by the sale of businesses in Russia and Belarus in September 2023 and currency headwinds. Organic revenue rose 1.3% at constant rates, reflecting New Categories growth of 8.9%. Combustibles organic revenues increased 0.1% as price/mix of 5.3% was offset by 5.2% lower volume. Adjusted organic profit from operations rose 1.4% at constant rates to £11.9 billion, while earnings per share lifted 3.6% to 362.5p. The group generated £7.9 billion of free cash flow before dividends.

The dividend for the year is up 2% to 240.24p, payable in four equal quarterly instalments of 60.06p in May, August, November and February 2026.

How have shares performed? Up 25% at 2,880p (3,156p on Thursday)

How much is the boss paid? The base salary of chief executive Tadeu Marroco is set to increase in April by 2.5% to £1.4 million. His total remuneration for 2024 amounted to £5.96 million, which compared with sums of more than £8 million recorded for predecessor Jack Bowles in 2021 and 2022 and £10.2 million for Nicandro Durante in 2017. Marroco’s total included cash and deferred shares worth £2.7 million after the annual bonus scheme paid 78.6% of the maximum. The 42.1% vesting of long-term incentives contributed £1.47 million.

How was variable pay determined? Strong cash delivery, operating profit growth and the contribution of new categories were the biggest factors in the annual bonus outturn. BAT ranked fifth amongst its peers for total shareholder return, resulting in a near maximum vesting under this metric in the long-term incentive scheme. Strong cash flow conversion also contributed, but there was no vesting under the measures of earnings per share and revenues growth.

What’s in the new remuneration policy? The maximum long-term incentive opportunity for the chief executive is set to increase from 500% to 600% of salary. This will be accompanied by a cap on salary increases, while the short-term bonus is staying at 250% of salary. The maximum opportunity under the new policy is £13.9 million, rising to £18.2 million in the event of 50% share price appreciation. It said the package is positioned around mid-market levels versus the group’s international pay comparator group. Changes to performance measures and weightings for 2025 include a stronger focus on improving profitability in new categories.

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Why the increase in long-term pay? It points out BAT is now a significantly larger and more complex organisation, with 44% of revenues and 54% of adjusted profit derived from the US market. The company operates across five product categories, requiring capabilities in scientific research, product design and technical innovation. Changes in the competitive market for global talent have created a pay compression challenge as incentive opportunities for the chief executive were last reviewed nine years ago. It added: “The current remuneration policy now limits our ability to develop appropriately leveraged and differentiated pay for performance, both for the executives and the wider senior leadership population. Consequently, the group carries a risk with talent attraction, retention and succession planning in what is an international market and a challenging category.”

What about pay arrangements for the new finance director? Soraya Benchikh’s base salary on her appointment in May was set at £800,000, a 5% reduction versus her predecessor's salary. The figure is set to rise in April by 3.5% to £828,000. She received a cash payment of £1.17 million to compensate for awards at her previous employer which were due to be paid or vest in 2024 soon after her joining date. She also has received replacement awards of BAT shares worth £1.8 million to cover long-term incentives that were lost from her employment at Diageo.

How did last year’s AGM go? The annual remuneration report was approved with 96.58% of votes in favour.  The remuneration policy was last approved at the 2022 AGM with 94.85% support.

How’s the company doing on diversity? Fifty percent of board roles were held by women at the end of 2024, including one senior position, and is due to rise to 60% after the AGM. Representation from ethnic minority backgrounds is 40%.