AstraZeneca, the UK's number two drug maker, has launched a review of its executive share option scheme after criticism from shareholders.
A number of the group's largest shareholders have told the company they want directors to be barred from exercising options if they fail to meet certain performance targets. At the moment, directors are granted options without any restrictions on whether they can cash them in.
The review was revealed in AstraZeneca's remuneration report, part of its annual report to shareholders, published yesterday. The company says the issue was raised when it consulted its largest shareholders on pay. "While there are no apparent concerns on the overall levels of remuneration, concern has been expressed about the fact that the AstraZeneca share option plan currently involves the consideration of performance criteria on grant, rather than the fulfilment of performance conditions before options can be exercised," it said.
The report says the pharmaceutical group's remuneration committee, led by Sir Peter Bonfield, is bringing forward a review of the share option scheme that had been due in 2005. Any changes will be implemented in time for next year's AGM.
Sir Tom McKillop, the chief executive, was granted options on 128,498 shares in 2003, exercisable at 2,231p from 2006 and taking his total number of share options to 453,242. Those that are in the money are worth £1.4m at the current share price. Sir Tom saw his pay rise 21 per cent to £1.8m last year, including a bonus of £860,000.
AstraZeneca shares rose 21 per cent last year, outstripping the global average for pharmaceuticals groups. The current remuneration policies go to a vote of shareholders on 29 April.
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