Shire share price: Pharmco faces shareholder revolt over CEO pay

Shire (LON:SHP) is facing a shareholder revolt this week after handing a 25-percent pay rise to its chief executive last summer, The Sunday Times has revealed. The rare disease specialist is set to become the latest blue-chip company to suffer a rebellion over its executive pay plans following shareholder revolts at BP (LON:BP) and Anglo American (LON:AAL).

Shire’s share price fell 0.72 percent to close at 4,277p on Friday. The decline was part of a broader market selloff which saw the blue-chip FTSE 100 index shed 71 points to close 1.11 percent lower at 6,310.44. The pharmco’s shares have lost nearly a quarter of their value in the year-to-date.
The Sunday Times reported yesterday that the Institutional Voting Information Service, one of the City’s most influential corporate governance advisers, was understood to have issued a rare ‘red top’ warning ahead of Shire’s annual general meeting this week. Institutional Shareholder Services, another advisory group, has also reportedly recommended a vote against chief executive Flemming Ornskov’s pay deal.

News of the upcoming shareholder revolt comes after Shire disclosed in its annual report that it had boosted Ornskov’s salary by 25 percent to $1.69 million in July, arguing that up to the summer of 2015, the remuneration of its boss had been “positioned behind his peers and there was an immediate requirement to take action to ensure the CEO’s retention given his attractiveness as a potential recruitment target”.
Insiders at the blue-chip pharmco told The Sunday Times that shareholders were not consulted on the rise because at the time the company was engaged in negotiations to buy American rival Baxalta. The newspaper notes that many top Shire investors are known to be more upset by the decision not to consult than the scale of the rise, with some intending to also abstain on re-electing the remuneration committee.
Shire’s annual general meeting is scheduled for Thursday, to be followed by the group’s first-quarter results on Friday.
As of 07:45 BST, Monday, 25 April, Shire PLC share price is 4,277.00p.