Pharmaceutical giant GlaxoSmithKline (GSK) has suffered an unprecedented defeat at its annual general meeting when shareholders voted against million pound pay deals for executives.
Shareholders made their feelings clear
The group said 50.72% of votes were cast against approving the group's remuneration report.
Shareholders had voted earlier by a clear majority to re-elect the GSK board.
But at the vote on remuneration, only 49.28% backed the board, meaning the biggest shareholder revolt of its kind in UK corporate history.
Investors reacted angrily to a controversial "golden parachute" pay package for chief executive Jean-Pierre Garnier.
End to corporate greed?
Analysts had expected the pay resolution to squeeze through on proxy votes.
But the scale of the protest vote proved to be humiliating for the GSK board - the historic vote, although only advisory, makes GSK the first British blue-chip company to have its pay scheme rejected by shareholders.
Roger Lyons, joint general secretary of the manufacturing union Amicus, said that the vote would have far-reaching implications for a number of other big companies.
"Corporate greed will never have the same free reign," he told BBC News 24.
'Taking it seriously'
Major shareholders including Standard Life had already said they would be voting against the pay proposals.
The life insurer, which manages over 110 million shares in GSK, said it had "significant concerns over the present pay policies and practices".
Britain's boardrooms are now on notice
GSK chairman Sir Christopher Hogg said his board took the vote's result "very seriously".
"A major reason for the negative vote was that elements of the remuneration package do not accord with what's regarded as best practice by some shareholders," said Sir Christopher.
"That is something which the board is aware of and one reason why we have called on Deloitte and Touche to carry out an independent review."
The company has appointed Deloitte & Touche to carry out an independent review of the remuneration policy, results of which will come in 2004.
"The board clearly registers the shareholders' sensitivity to the contractual notice periods and payments on termination," said Sir Christopher.
The "contractual notice periods" refers to the complaint the GSK directors have rolling two-year contracts, rather than the standard one-year deal.
Brendan Barber, joint secretary elect of the TUC, said:
"This is an extremely significant result, which will have repercussions way beyond GlaxoSmithKline.
"Britain's boardrooms are now on notice."
The company's shareholders were particularly angry about the "golden parachute" payment chief executive Jean-Pierre Garnier would have received if he lost his job.
This was estimated by Pensions Investment and Research Consultancy at $35.7m (£22m) - a figure GSK disputes, since it includes some $12m of already vested share options.
Garnier came under fire from shareholders
The National Association of Pension Funds (NAPF) and the Association of British Insurers (ABI), whose members together account for more than 40% of investments in the London stock market, both disapprove.
The NAPF had told members to abstain on the remuneration issue and the re-election of Mr Garnier and Chief Financial Officer John Coombe.
The powerful California Public Employees' Retirement System (Calpers), a big GSK shareholder, also voiced opposition.