AstraZeneca has announced that it will increase its annualised dividend by 7%, taking it from $0.20 (£0.16) to $3.10 (£2.47) per share, as the firm votes on a £1.8m pay rise for its chief executive officer (CEO).

The British-Swedish pharmaceutical firm said the move underlines the "confidence in its performance and cash generation".

The announcement comes as shareholders prepare to vote on increasing the firm’s CEO pay by £1.8m. If the pay rise is confirmed at the annual general meeting, Pascal Soirot’s pay packet could increase to a maximum of £18.9m in 2024.

Chair at AstraZeneca, Michel Demaré, said: "The board is delighted to announce a 7% increase to the dividend, taking it to $3.10 per share. This uplift is in line with our progressive dividend policy, which remains unchanged, and reflects the continuing strength of AstraZeneca's investment proposition for shareholders."

Reuters reported that shares in the FTSE 100 firm, which is the second-listed company by market value, have dropped 8.5% in the past year, with an increase of 1.2% following the announcement to £108.58 per share.

Investment director at AJ Bell, Russ Mould, commented: "There has been a lot of debate about whether Soriot deserves an £18.7m pay package. He’s certainly delivered a lot of value for shareholders and presided over a major period of growth for the business – and no one is denying that. The moot point is the scale of his remuneration."

Lead equity analyst at Hargreaves Lansdown, Sophie Lund-Yates, added: "Shareholders won’t be blind to the fact that this is a barely disguised sweetener, but it may quell appetites enough to get the divisive package through.

"The bigger picture for AstraZeneca still centres on the work it does on rarer and more complex treatments – dominating this area of the market takes very deep pockets, and that doesn’t appear to be under threat."

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