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Last Updated: Monday, 19 May, 2003, 22:03 GMT 23:03 UK
Q&A: Glaxo defeated by shareholders
Shareholders at pharmaceutical giant GlaxoSmithKline have defeated the firm's proposed pay package for directors at its annual general meeting.

The BBC's business editor Jeff Randall explained the possible impact of this unprecedented move to the Ten O'Clock News.

How significant is this?

I think it's really significant that investors are prepared to take on a company the size of Glaxo.

Remember, this is one of Britain's top three or four companies.

There has been a rising tide of protest recently by shareholders against so-called "fat cat pay".

Companies like Reuters, Barclays and Granada have all had this.

But at Glaxo, the shareholders have decided to draw a line in the sand.

They've said: "Enough is enough, we're not going over this."

Why did the shareholders reject the proposal?

What has really offended them here is that this was a package which, in effect, was a reward for failure.

Remember, Jean-Pierre Garnier [the firm's chief executive] would have only got it if he had been dismissed.

And if he had been dismissed, then one assumes he had failed in some respect.

It was a golden parachute. Or, in this case, a jewel-encrusted parachute.

Could this action be repeated elsewhere?

I think a lot of company directors will be looking very closely at their contracts and how they portray those contracts to the outside world.

There is no doubt, this was really, really important.

We will see this as a watershed.

How has GlaxoSmithKline responded?

Glaxo is taking this very seriously.

They've called in outside consultants Deloitte & Touche to look at how they structure their pay.

But as we know, calling in the consultants is the last refuge for the desperate.

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