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Tuesday, 26 November, 2002, 17:46 GMT
Glaxo backs down on CEO pay deal
GSK logo and dollar bills
GSK shareholders were strongly against the pay deal
GlaxoSmithKline, Europe's biggest drugs group, has bowed to shareholder pressure and held off giving a multi-million pound pay rise to its chief executive, Jean Pierre Garnier.

Big pay deals for company bosses have come under the spotlight as the government attempts to hold the line on public sector pay during the firefighters dispute.


After taking into account shareholder views, the company has decided to postpone a decision on the matter

GSK

GlaxoSmithKline held an emergency meeting on Tuesday, following widespread criticism of the move to increase Mr Garnier's pay package from around 6m to between 11m and 19m.

The company had said the huge increase was designed to bring the chief executive's package in line with that of his global counterparts.

But following the meeting, the company said in a statement: "After taking into account shareholder views, the company has decided to postpone a decision on the matter".

Worth the money?

Mr Garnier's proposed pay hike met with shareholder outrage, following a year in which the company itself has seen its value dwindle.

Glaxo shares have slumped by over 30% in the last 12 months, while profits fell 25% to 4.5bn in the last financial year.


We still need to see what happens in the future

National Association of Pension Funds

Chairman Sir Christopher Hogg reportedly visited major investors last week to gauge sentiment towards the deal.

Tuesday's announcement indicates it was not well received.

A spokeswoman for the group refused to specify terms of the new deal but said it was likely to be set "at a similar level to last year".

The National Association of Pension Funds cheered the news, and praised the company for listening to shareholders.

But it warned: "We still need to see what happens in the future".

Shareholder power

GSK's decision is the latest example of companies being forced to heed shareholder voices.

Earlier on Tuesday, the telecoms company Cable & Wireless said its chairman designate Davis Nash had resigned following shareholder pressure for a management reshuffle.

In May, insurance giant Prudential scrapped plans for a new executive bonus scheme after protests from investors.

At the CBI conference in Manchester this week, companies came under pressure to rein in big pay deals to rebuild trust with the public - damaged by the US corporate scandals.

A BBC survey showed that the public was deeply concerned about the high level of pay awards for chief executives - especially when they were not linked to results.


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See also:

24 Nov 02 | Business
22 Nov 02 | Business
01 Nov 02 | England
26 Sep 02 | England
01 Jul 02 | Business
31 May 02 | Business
29 Nov 01 | England
26 Nov 02 | Business
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