Introduction
My introduction to the 2009 Directors' Remuneration Report seeks to give context to the pages that follow.
As we indicated in last year's Directors' Remuneration Report, the Remuneration Committee has undertaken and completed a review of Executive Director and SET member remuneration during the course of the year. As part of this process, we have consulted a number of institutional investors, and are grateful for their contribution to the development of our proposals.
We have concluded that the fundamental principles that underpin the Company's approach to remuneration remain appropriate for the business and our current strategy. At the same time, we now have the opportunity, by developing our compensation structures, to build on the historical financial success of the Group, to invest for the future, and to focus on stewardship and shareholder value-creation over the long term.
We are therefore proposing to reshape the Group's long-term incentive arrangements, not to increase the overall value of the package, but to recognise that AstraZeneca operates in a uniquely long-term industry. We aim to strengthen thereby the alignment between the time horizons over which our business investment decisions are taken and those to which our share incentive programmes relate.
You will see that we are proposing the introduction of a new share plan (to operate alongside the existing Performance Share Plan and simultaneous with the cessation of further grants of options under the Share Option Plan) with an eight-year time horizon. Shareholders have been receptive to a long-term plan of this nature, conditional on sustainable financial performance and delivery of shareholder returns. At the same time, our discussions with investors have recognised that the long-term nature of the plan means that the Remuneration Committee should retain some flexibility as to the operation of the plan to ensure that this combination of incentive structures supports the best interests of the business and shareholders over the medium and long term.
The 2009 Directors' Remuneration Report which follows describes the key principles that have informed the Remuneration Committee's thinking, and provides a summary of the proposals themselves. We will seek shareholder approval for the new share plan at the AGM on 29 April 2010. Detailed plan terms, along with the specific performance requirements that will apply to the initial awards, will be set out in the circular sent to shareholders in advance of the AGM.
These proposals will facilitate the delivery of AstraZeneca's business strategy. They explicitly reflect the discussions that we have had with shareholders. On behalf of the Remuneration Committee, I commend them to you.
John Varley
Non-Executive Director
Chairman of the Remuneration Committee
Directors' Remuneration Report
This Directors' Remuneration Report (Report) has been prepared in accordance with the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (Regulations) and meets the relevant requirements of the Financial Services Authority's Listing Rules. As required by the Regulations, a resolution to approve this Report will be proposed at the AGM on 29 April 2010.
The following sections of this Report, up to and including the Non-Executive Directors section, were not subject to audit by KPMG.
