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Last Updated: Monday, 19 May, 2003, 19:52 GMT 20:52 UK
Shareholders put GSK under pressure
By Emma Clark
BBC News Online business reporter

Pharmaceutical giant GlaxoSmithKline held its annual general meeting (AGM) in London on Monday, amid controversy over its pay package for chief executive Jean-Pierre Garnier. BBC News Online went along to see what the fuss was about.

Amicus union General Secretary Roger Lyons at the AGM
The Amicus union joined the protests

It promised to be the highlight of the AGM season - a showdown between angry shareholders and a recalcitrant board of directors.

In the event, it proved a very British affair: polite and restrained with occasional - and even eccentric - outbursts from disgruntled investors.

The agenda was clear from the outset. Mr Garnier faced ignominy for a pay package worth 23m, while the company was under an obligation to defend the murky terms of its remuneration policies.

At the Queen Elizabeth II conference centre in Westminster, the media hovered like vultures, hoping for rich pickings from the shareholders who braved torrential rain to attend the gathering.

As it turned out, the shareholders remained defiantly impervious to the press.

Battalions of fierce pensioners, dressed in flowered Laura Ashley skirts, tweed jackets, brown cardis and Hush Puppies, kept their eyes fixed straight ahead as they made resolutely for the doors of the conference centre.

Only Mr G.A. Miller let his guard down when he told BBC News Online: "I've come to see what a man worth 23m looks like."

Fat cat frolics

The cameras, meanwhile, had to make do with a man in a 6ft fat cat suit, provided by the trade union Amicus. Around his furry neck, he boasted a "23m reward" for Mr Garnier.

After running the gauntlet of the press, the pensioners then faced heavy security inside the conference centre.

I can see you are going to give me an uncomfortable afternoon
Sir Christopher Hogg
Laminated Liberty shopping bags bumped along on an X-ray conveyer belt, mixing incongruously with the mobile phones belonging to representatives of the corporate shareholders.

But all was not lost. One lady pensioner managed successfully to evade the X-ray and legions of security guards. Only when she reached the auditorium on the third floor was she divested of her wicker picnic basket by a zealous attendant.

"You can't take that in madam!"

"Be my guest," came back the polite reply.

But inside the hall there were greater dangers lurking than a wicker basket. The classical muzak, played perhaps to soothe ruffled tempers, was abruptly interrupted by a beeping alarm.

Security control on an overhead speaker asked attendees to remain in their seats until further clarification could be given. But seconds later the all-clear was greeted with half-hearted applause.

On the back foot

A weary Sir Christopher Hogg, the chairman who has been vilified in the press, welcomed the shareholders before handing over to "JP" to make his presentation.

Jean-Pierre Garnier
Will 'JP' Garnier keep his parachute?

"It is a pleasure to give you a brief update on how your company is doing," said Mr Garnier in soft French tones. A pleasure? Has he not been reading what they have been saying about him in the press recently?

By the end of the day, institutional investors carried through their threat to vote against the company's remuneration resolution.

Most fund managers would not comment publicly, but off-the-record they told BBC News Online that GSK's pay policies were "out of line with the industry standard".

Only Morley Fund Management, which owns 1.78% of the company's shares, confirmed before the meeting that it would vote against the resolution.

Mr Garnier gave a polished performance where he told the auditorium that GSK was outperforming its peers. On the tricky matter of producing more drugs, he said that a full pipeline would "in a couple of years bring forth a flurry of new product launches".

He was not without his admirers. A former employee and shareholder, Ian Hunter, used the question-and-answer session to describe JP as "a tough and uncompromising leader whose knowledge of the industry was outstanding".

Mr Hunter's praise was remarkably unbiased - he later revealed he had been "one of the costs" after he lost his job during GSK's merger more than two years ago.

Shareholder skirmishes

Many shareholders referred directly or obliquely to the furore over pay. Joan Hall from Yorkshire asked about the company's legal costs, but managed to preface her question with: "I have invested hard-earned money into the company and boy would I like some crumbs from the director's table."

Her observation was greeted with laughter and applause.

More than three times during the meeting, Sir Christopher batted off inquiries about remuneration with the catch-all phrase: "the issue was too complex" to explain. So the shareholders were left none-the-wiser.

Only a formidable questioner in the shape of Pamela Thomas seemed to rattle him. Firstly, she upbraided him on his grammar.

She then asked him in genteel tones what his attitude would be if the company were to be nationalised by the Labour government, much to the general mirth of the audience.

Unfortunately, for Sir Christopher, he let his doubts about the relevance of the question show.

"If I have asked you a question, I demand an answer," declared his opponent.

"I can see you are going to give me an uncomfortable afternoon," replied the regretful Sir Christopher, to yet more laughter.

Loyal followers

The proceedings got back onto a more even, if less humorous, keel with a question on the company's anti-Aids drugs.

On the whole, the afternoon did not seem as uncomfortable as it could have been for Sir Christopher.

Many of the shareholders were loyal supporters of GSK - one told the hall "this is a great company and I am proud to be a shareholder".

However, they were clearly ashamed and disapproving of GSK's mishandling of the remuneration issue.

And ultimately they voiced their protest by voting against the motion to approve GSK's remuneration report - leaving the company with more than negative press to ponder.

It has alienated some of its keenest supporters who were even willing to risk a very British downpour to register their displeasure on Monday afternoon.

Jean-Pierre Garnier, GSK chief executive
"I justify it because it's demand and supply...the industry is very competitive for good talent."

Glaxo defeated by shareholders
19 May 03  |  Business
Glaxo offers reassuring pill
12 Feb 03  |  Business
Glaxo backs down on CEO pay deal
26 Nov 02  |  Business

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